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Commercial  Arbitration 


BEING  A  COMPILATION  OF 


AWARDS    OF    ARBITRATION    COMMITTEES    OF    VARIOUS 

TRADE    ASSOCIATIONS    AND    CHAMBERS    OF 

COMMERCE  IN  THE  UNITED  STATES 


TOGETHER  WITH 


INTRODUCTORY  TEXT  ON  COMMON-LAW  AND 
STATUTORY  ARBITRAMENT 


BY 
H.  ARTHUR  DUNN 

AND 
HENRY  P.  DIMOND 

Of  the  San  Francisco  Bar 


PUBLISHED  BY 

A.  CARLISLE  &  CO. 

25  1    BUSH  STREET 
SAN  FRANCISCO 


M W-X    1~  *  3U 


ARBITRIUM  EST  JUDICIUM  BONI  VIRI 
SECUNDUM  iEQUUM  ET  BONUM 


Copyright,  1922 
By  H.  ARTHUR  DUNN 


Pref 


rerace 

THE  settlement  of  disputes  between  merchants  by  arbitration 
originated  when  peoples  began  crossing  seas  and  boundaries  to 
barter  their  goods  for  the  merchandise  of  others.  While  it  is  not 
the  purpose  of  this  work  to  undertake  an  historical  survey  of  the  devel- 
opment of  arbitration  in  commercial  matters,  it  is  worthy  of  note  that 
there  has  been  rapid  advancement  in  the  number  and  varied  character 
of  arbitrations  between  persons  engaged  in  business,  until  to-day,  in 
many  branches  of  industry,  particularly  in  the  production,  sale  and 
distribution  of  staples  and  raw  products,  arbitration  is  recognized 
as  an  essential  element  of  the  contractual  relation. 

Notwithstanding  the  increased  acceptance  of  arbitration  in  com- 
mercial disputes,  there  is  no  authoritative  work  wherein  the  business 
man  may  obtain  the  decisions  of  arbitrators  covering  important  trade 
customs  and  the  interpretation  of  familiar  contract  terms,  problems 
that  arise  daily  in  almost  every  active  line  of  commerce.  Hence,  the 
authors  have  undertaken  this  work  in  the  hope  that  it  may  open  the 
way  to  the  establishment  of  a  system  of  Reports  of  Commercial  Arbi- 
trations generally  recognized  and  accepted  as  sound  business  doctrine 
by  those  engaged  in  commerce. 

Various  trade  and  commercial  organizations  throughout  the  United 
States  have  established  methods  of  arbitration  for  the  adjustment  of 
disputes  arising  out  of  contracts.  Some  of  these  methods  have  endured 
for  many  years  and  have  been  strengthened  and  improved  as  time  and 
experience  have  justified  the  evolution.  Merchants  have  elected  to 
submit  their  controversies  with  each  other  to  these  forums,  rather 
than  face  the  vexatious  delays,  technicalities  and  expense  involved  in 
litigation,  fully  realizing  that  prompt  decision  was  certain  and  that 
in  the  main  the  cause  was  given  careful  and  frequently  expert  at- 
tention by  persons  familiar  with  the  subject  matter  and  conversant 
with  the  customs  and  usage  of  the  trade  involved.  It  is  not  an  idle 
assertion  that  even  the  most  contentious  claimant  will  admit  that 
arbitrators  invariably  give  to  a  cause  under  submission  more  painstaking 
thought  than  is  accorded  by  the  average  jury  summoned  on  a  similar 
cause  in  a  court  of  justice.  A  jury  is  not  selected  for  their  special  quali- 
fications in  the  subject  being  litigated  but  rather  because  they  are 
unbiased  and  unacquainted  with  the  issue,  whereas  arbitrators  are 
especially  chosen  because  of  their  experience  and  fitness  to  decide  the 
particular  questions  involved.     As  to  the  fairness  of  arbitrators  in 


518616 


commercial  disputes,  aside  from  all  other  considerations,  self-interest 
alone  requires  them  to  exercise  meticulous  care  in  fixing  just  rules  by 
their  impartial  decisions;  for  a  policy  or  custom  so  fixed  in  an  estab- 
lished trade  of  necessity  affects  themselves  in  that  trade  in  future 
transactions. 

In  arbitrations,  technicalities  and  subterfuge  are  swept  aside  by 
conscientious  arbitrators,  who  seek  to  do  abstract  justice  and 
exact  equity.  Technical  proof  is  not  so  essential  as  substantial 
proof.  Arbitrators,  unhampered  by  skillful  objections,  endeavor  to 
discover  the  facts  in  a  matter  under  submission,  and  having  done  so, 
it  is  their  duty,  imposed  by  the  very  highest  trust  in  their  integrity,  to 
make  their  findings  and  award  in  accordance  therewith.  This  is  not 
intended  by  indirection  as  a  criticism  of  our  judicial  system,  for  in 
courts  of  justice  there  must  be  rigid  rules  for  the  guidance  of  bench 
and  bar,  else  the  whole  system  would  fail  to  function  orderly.  The  one 
criticism  that  the  authors  voice  in  common  with  the  best  thought  of 
the  country  is  that  the  wheels  of  justice  grind  so  exceedingly  slow 
that  litigants  too  frequently  lose  even  in  victory. 

In  the  preparation  of  this  work  the  authors  are  indebted  to  those 
trade  organizations  which  have  made  available  their  records  on  arbi- 
tration, and  they  acknowledge  with  grateful  appreciation  the  helpful 
suggestions  and  cooperation  of  those  leaders  of  industry  who  have 
turned  from  their  own  affairs  from  time  to  time  to  give  consideration 
and  practical  advice  concerning  the  scope  and  method  of  treating 
the  subjects  chosen  for  the  work. 

The  authors  have  striven  for  simplicity  of  phrase,  stripped  of  legal 
terminology,  in  order  that  the  work  may  become  a  ready  reference 
for  those  whose  function  it  is  to  guide  business  enterprises  along  a 
course  well  charted  as  to  fair  dealing  between  competitors.  At  the 
same  time  it  is  hoped  it  will  be  found  of  some  value  to  the  legal  pro- 
fession, since  it  places  before  them  accurate  and  intimate  information 
as  to  the  views  of  merchants  on  disputed  points  in  many  lines  of  in- 
dustry, and  to  a  certain  extent  thereby  establishes  trade  customs. 
Likewise,  it  will  be  helpful  to  the  student  of  law  in  that  the  legal 
principles  of  both  common  law  and  statutory  arbitration  are  elucidated, 
and  to  the  student  of  economics  it  should  be  of  value  since  it  points 
the  way  to  avoid  the  mistakes  and  missteps  in  business  that  make  for 
waste  and  controversy  and  therefore  retard  progress. 

San  Francisco,  H.  Arthur  Dunn, 

Dec.  1,  1922.  Henry  P.  Dimond. 


COMMON-LAW    ARBITRATION 

Arbitration  Under  Common  Law 

I.      ARBITRATION. 

1.  Defined. 

2.  Common  Law  and  Statutory. 

3.  Arbitration  and  the  Courts. 

4.  Commercial  Recognition. 

5.  What  May  be  Submitted. 

6.  Distinguished  from  Reference. 

II.    SUBMISSION. 

7.  Defined. 

8.  Who  May  Submit. 

9.  Nature  of  Submission. 

10.  Creates  Special  Jurisdiction. 

11.  Written. 

12.  Oral. 

13.  Fixing  a  Time  for  Award. 

14.  Extension  of  Time. 

15.  Agreement  to  Submit. 

16.  As  a  Condition  Precedent. 

III.     REVOCATION  OF  SUBMISSION. 

17.  By  Operation  of  Law. 

18.  By  Death  of  Party. 

19.  Lunacy  of  Party.     . 

20.  By  Death  of  Arbitrator. 

21.  By  Refusal  of  Arbitrator  to  Act. 

22.  Bankruptcy. 

23.  By  Suit  Involving  Same  Subject  Matter. 

24.  Formality  of  Revocation. 

25.  Time  of  Revocation. 

26.  Notice  of  Revocation. 

IV.     ARBITRATOR. 

27.  Defined. 

28.  Qualification. 

29.  Agent  of  Both  Parties. 

30.  Appointment  of  Arbitrator. 

31.  Must  be  Disinterested  and  Impartial. 

32.  Business  Relations  of  Arbitrator  and  Party. 

33.  Oath  of  Arbitrator. 

34.  Substitution  of  Arbitrator. 


COMMERCIAL  ARBITRATION 

V.     PROCEDURE  IN  ARBITRATION. 

35.  Notice  of  Time  and  Place  of  Hearing. 

36.  All  Arbitrators  Must  Be  Present. 

37.  Arbitrators  Must  Hear  the  Evidence. 

38.  May  Adjourn  Hearing. 

39.  Powers  of  Arbitrators. 

VI.    AWARD. 

40.  Award  is  Decision  of  Arbitrators. 

41.  Award  in  Alternative. 

42.  Arbitrators  Must  Publish  Award. 

VII.    ENFORCEMENT  OF  AWARD. 

43.  Award  is  Basis  of  Action  or  Defense  Thereto. 

44.  Submission  Must  be  Proved. 

VIII.    AVOIDING  AWARD. 

45.  Award  Subject  to  Review  of  Court. 

(1)  Want  of  Jurisdiction  in  the  Arbitrators; 

(2)  For  Fraud; 

(3)  For  Collusion; 

(4)  For  Misconduct  on  the  Part  of  an  Arbitrator; 

(5)  For  Gross  Error; 

(6)  For   Mistake  in  the   Description  of  Some   Person   or 
Property  Vital  to  the  Issue; 

(7)  For  Uncertainty; 

(8)  When  Impossible  of  Performance. 

46.  In  General. 

IX.     STATUTORY  ARBITRATION. 

47.  In  General. 

48.  What  May  be  Submitted  Under  Statute. 

49.  Who  May  Submit. 

50.  Submissions  in  Writing. 

51.  When  Submission  Entered  as  an  Order  of  Court. 

52.  Arbitrators  Named  in  Submission. 

53.  No  Power  of  Substitution. 

54.  Umpire. 


COMMON-LAW   ARBITRATION  3 

X.    PROCEDURE. 

55.  Arbitrators  Must  Be  Sworn. 

56.  Arbitrators  Must  Meet  Together. 

57.  Notice  of  Time  and  Place  of  Hearing. 

58.  Arbitrators  Must  Hear  the  Evidence. 

59.  May  Adjourn  Hearing. 

60.  Powers  of  Arbitrators. 

XI.    AWARD. 

61.  Must  be  in  Writing. 

62.  Certainty  of  Award. 

63.  Entry  of  Award  as  Judgment  of  Court. 

64.  Causes  for  Vacating  Award. 

65.  Court  May  Modify  or  Correct  Award. 

66.  Decision  Subject  to  Appeal. 

§1.  Arbitration  Defined — Arbitration  is  the  voluntary  sub- 
mission by  the  interested  parties  of  a  dispute,  difference,  or  matter 
in  controversy  to  the  investigation  or  inquiry  of  one  or  more  dis- 
interested persons,  appointed  by  the  parties,  to  be  finally  determined 
and  decided  by  such  person  or  persons,  i  Arbitration  is  a  quasi  judicial 
procedure  whereby  the  parties  designate  their  own  unofficial  judge  or 
judges  to  adjudicate  the  matter  submitted,  and  those  so  designated 
are  called  arbitrators.  2  Their  decision  or  determination  is  called  the 
award.  3 

§2.  Common  Law  and  Statutory — Arbitration  may  be  classi- 
fied (1)  as  under  the  common  law,  whereby  the  parties  have  the  pro- 
tection of  their  respective  rights  afforded  by  the  rules  of  common 
law  and  are  subjected  to  such  limitations  as  are  thereby  imposed,  and 
(2)  under  statutory  law,  whereby  the  parties  participate  in  the  enlarged 
benefits  granted  by  the  statute  and  must  adhere  to  the  restrictions 
thereof. 

Hence  it  is  that  the  two  classifications  are  herein  treated  separately, 
the  purpose  being  to  avoid  confusion  in  explaining  the  differences  and 
distinctions  between  the  two,  thereby  enabling  those  for  whom  this 
work  is  written  more  readily  to  grasp  and  understand  the  niceties  of 
the  issues  that  may  be  raised. 

§3.  Arbitration  and  the  Courts — Arbitration,  anciently 
frowned  upon  by  the  courts  as  being  an  encroachment  upon  their 

1.  Garr  v.  Gomez,  9  Wend.  (N.  Y.)  649,  661, 
Benjamin  v.  U.  S.,  29  CtCl.  417-19. 

2.  Shively  v.  Knoblock,  8  Ind.  A.  433,  35  NE.  1028-29. 

3.  Benjamin  v.  U.  S.,  29  CtCl.  417-19. 


4  COMMERCIAL   ARBITRATION 

functions,  is  now  favored  and  encouraged  by  the  courts  as  affording 
disputants  speedy  relief  at  a  minimum  of  expense.*  In  the  progressive 
development  of  our  judicial  system,  the  courts  have  been  mindful 
that  a  rule  which  affords  persons  an  opportunity  to  compose  their 
differences  makes  for  advancement,  and  since  it  does,  they  have  inclined 
strongly  in  its  favor.  The  courts  will  give  every  reasonable  intendment 
to  an  award  to  uphold  its  validity,  for  the  parties  having  selected  their 
forum,  may  not  be  permitted  to  avoid  responsibility  for  the  acts  of 
their  own  creatures.  5 

§4.  Commercial  Recognition — Persons  engaged  in  commerce, 
since  the  very  earliest  times,  have  inclined  toward  the  amicable  adjust- 
ment of  their  differences  arising  in  trade,  until  to-day,  in  matters 
involving  commercial  transactions,  the  settlement  of  disputes  by  arbi- 
tration is  universally  recognized  and  accepted  and  contracts  between 
merchants  usually  contain  a  provision  that  any  difference  arising 
thereunder  shall  be  settled  by  submission  to  arbitrators,  to  be  selected 
either  by  the  parties  or  by  reference  to  a  committee  of  a  designated 
organization. 

§5.  What  May  Be  Submitted  to  Arbitration — At  common 
law  any  dispute  or  difference  of  a  civil  nature  may  be  submitted  to 
arbitration.  6  It  is  not  necessary  that  there  be  a  legal  cause  of  action 
depending  between  the  parties  to  submit,  i  but  any  difference,  dispute 
or  doubt  as  to  the  rights  of  the  parties  may  be  made  the  subject  of 
arbitrament.  Questions  of  law  may  be  submitted. »  The  first  requisite 
to  a  submission  is  a  difference  or  dispute,  the  cause  of  which  is  valid 
in  itself.  9  A  dispute  arising  out  of  an  illegal  contract  may  be  sub- 
mitted to  arbitrators,  but  their  award  would  be  treated  as  a  nullity 
in  law  and  in  equity,  for  an  award  cannot  make  that  legal  which  the 
law  declares  void.*0    Matters  of  a  criminal  nature  cannot  be  submitted,  i 

§6.     Distinguished  from  Reference— Arbitration  is  distinguished 
from  a  reference  in  this,  that  under    a   submission  to  arbitration  the 


4.  Suksdorf  v.  Suksdorf,  161  P.  465. 

5.  Utah  Const.  Co.  v.  West.  Pac.  162  P.  6310, 

Karthaus  v.  Ferrer,  1  Pet.  228,  7  L.  121,  Bk.  II  U.  S.   Notes,  688. 

6.  Byrd  v.  Odem,  9  Ala.  755-766. 

7.  Dilks  v.  Hammond,  86  Ind.  563; 
Downing  v.  Led,  98  Mo.  A,  604,  73  SW.  721; 
Parrish  v.  Strickland,  52  N.  C.  504. 

8.  Young  v.  Walter,  9  Ves.  Jr.  364,  32  Reprint  642; 
Lange  v.  Stouffer,  16  Pa.  251. 

9.  Pittsburgh  Const.  Co.  v.  West  Side  Belt  R.  Co.  151  Fed.  125,  11  LRANS  1145. 

10.    Singleton  v.  Benton,  114  Ga.  40  SE.  811,  58  LRA.  181,  2  Am.  &  Eng.  Enc.  Law.  2nd  ed.  p.  558. 
1.    Harrington  v.  Brown,  9  Allen  (Mass.)  579; 
Buckwalter  v.  U.  S.  11  Serg.  &  R.  (Pa.)  193; 
Reg.  v.  Blakemore,  14  Q.  B.  544,  68  ECL,  514,  117  Reprint  210. 


COMMON-LAW   ARBITRATION  5 

parties  are  desirous  of  obtaining  a  conclusive  decision  on  matters  in 
controversy  between  them.  The  proceeding  in  arbitration  is  quasi 
judicial,  and  there  must  be  substantial  adherence  to  certain  rules  in 
order  to  effect  a  valid  award.  An  appraisement,  valuation  or  reference 
contemplates  that  the  appraiser  shall  act  upon  his  own  initiative  and 
investigation,  without  holding  hearings  or  receiving  evidence  from 
the  parties.  2  There  are  instances  where  the  Courts  have  noted  a  dis- 
tinction without  a  difference  between  arbitration  and  appraisement^ 
but  the  weight  of  authority  is  that  an  arbitration  partakes  of  the 
nature  of  a  judicial  act,  whereas  an  appraisement  is  ministerial  in  scope 
and  nature. 

II.     SUBMISSION. 

§7.  Submission  Denned — A  submission  to  arbitration  is  a 
contract  between  two  or  more  persons  whereby  they  agree  to  submit 
a  dispute  or  difference  to  one  or  more  arbitrators,  and  to  be  bound  by 
the  decision  of  such  arbitrator  or  arbitrators.*  Without  a  submission 
in  some  form  there  can  be  no  valid  award,  s  The  submission  may  be 
in  writing,  under  seal,  or  by  parol.  * 

§8.  Who  May  Submit — (a)  Any  person  capable  of  contracting 
may  submit  to  arbitration  any  dispute  or  difference  concerning  which 
he  has  control  of  the  subject  matter.  ? 

(b)  An  infant,  being  without  legal  capacity  to  make  a  contract, 
cannot  be  bound  by  a  submission  to  arbitrate. » 

(c)  An  agent,  having  general  authority  to  bind  his  principal 
in  other  matters,  has  no  authority  to  submit  to  arbitration  for  or  on 
behalf  of  his  principal. 9  And  if,  without  specific  authority  so  to  do, 
an  agent  attempts  to  bind  his  principal  and  submits  a  matter  affecting 
the  rights  of  his  principal  he  will  be  bound  himself  by  the  award.  10 
If,  however,  the  principal  participates  in  the  arbitration  without 
protest,  or  if  after  award  he  ratifies  the  award,  in  whole  or  in  part,  he 
will  be  bound,  i 

(d)  A  partner  cannot  bind  the  co-partnership  by  a  submission  2 


2.  Seabree  v.  Chicago  Board  of  Education,  254  111.  438,  446,  98  NE.  931. 

3.  Van  Cortlandt  v.  Underhill,  17  Johns  (N.  Y.)  405. 

4.  District  of  Columbia  v.  Bailey,  171  U.  S.  161,  18  SCt.  868,  43  L.  ed.  118,  6  Am.  R. 
Morse  on  Arb.  and  Award,  p.  3. 

5.  The  Glencairn,  78  Fed.  379;  Cherokee  Nation  v.  U.  S.  40  CtCl.  252. 

6.  Russell  on  Arbitration,  p.    51. 

7.  Wyatt  v.  Benson,  23  Barb.  327;  Brady  v.  Mayor  of  Brooklyn,  1  Barb.  584. 

8.  Morse  on  Arb.  and  Award,  p.  4. 

9.  Morse  on  Arb.  and  Award,  p.  11. 
10.  Id. 

1.  Morse  on  Arb.  and  Award,  p.  13. 

2.  Hutchins  v.  Johnson,  12  Conn.  376. 


6  COMMERCIAL   ARBITRATION 

unless  he  be  authorized  to  do  so,  3  and  if  he  submits  co-partnership 
matters  to  arbitration,  an  award  made  thereunder  will  be  valid  against 
himself  although  it  will  not  be  good  against  his  co-partners.* 

(e)  A  corporation,  like  any  natural  person  having  capacity  to 
contract,  may  submit  to  arbitration  by  its  duly  qualified  officers  or 
specially  authorized  agent.  5 

(f)  An  executor  or  administrator,  in  his  official  capacity,  may 
submit  to  arbitration  demands  for  or  against  the  estate  6,  and  an  award 
will  bind  him  in  his  fiduciary  capacity.  7  An  administrator,  having 
no  control  over  the  realty  of  the  estate,  is  without  power  to  bind  the 
estate  by  a  submission.  8 

(g)  A  guardian  has  a  general  authority  to  submit  on  behalf 
of  his  infant  ward.  9  But  a  guardian  ad  litem  has  no  power  to  submit, 
even  though  the  submission  be  made  a  rule  of  court. io 

(h)  A  bankrupt  submitting  to  arbitration  cannot  bind  the 
assignees  or  the  estate,  *  but  he  may  become  personally  liable  for  costs 
awarded    against    him.  2 

(i)  Assignees  in  bankruptcy  may  submit  in  their  official  capacity 
and  bind  the  estate  and  themselves  in  their  official  capacity.  3 

§9.  Nature  of  Submission — The  submission  may  be  general  in 
character  to  one  or  more  arbitrators,  in  which  case  the  arbitrators  as- 
sume general  jurisdiction  of  the  entire  subject  matter,  embraced  in  all 
matters  in  dispute,  and  may  render  their  award  upon  all  points  of 
possible  difference  whether  of  law  or  of  fact.*  Or  it  may  be  limited  in 
scope,  thereby  restricting  the  arbitrators  to  the  issues  included  in  the 
submission.  And  the  submission  must  be  of  an  existing  difference  or 
dispute,  for  it  is  a  well  settled  rule  that  arbitrators  do  not  derive  juris- 
diction of  disputes  arising  subsequent  to  the  submission  of  a  definite 
proposition.  5 


3.  Hutehins  v.  Johnson,  12  Conn.  376. 

4.  Morse  on  Arb.  and  Award,  p.  9. 

5.  Morse  on  Arb.  and  Award,  p.  5. 

6.  Russell  on  Arb.,  p.  29. 

7.  Wheatley  v.  Martin's  Admr.,  6  Leigh.  62 

8.  Bridgham  v.  Prince,  33  Me.  174. 

9.  Morse  on  Arb.  and  Award,  p.  25. 
10.  Id. 

1.  Morse  on  Arb.  and  Award,  p.  30. 

2.  Id. 

3.  Id. 

4.  Karthaus  v.  Yllas  y  Ferrer,  1  Pet.  (U.  S.)  222,  7  L.  ed.  121;  Parsons  on  Contracts,  191;  Story  on 
Partnerships,  §§114-116;  Russell  on  Arb.,  p.  20. 

4.  U.  S.  v.  Chicago,  etc.  R.  Co.,  34  Fed.  471;  Ryan  v.  Dougherty,  30  Cal.  218. 

5.  Omaha  v.  Omaha  Water  Co.,  218  U.  S.  180,  36  615,  54  L.  ed.  SCT.  991 ;  48  LRANS  1084. 


COMMON-LAW   ARBITRATION  7 

§10.  Submission  Creates  Special  Jurisdiction — The  sub- 
mission creates  the  special  jurisdiction  of  the  arbitrator  and  it  is  an 
express  limitation  upon  him.  6  If  he  enlarge  upon  its  scope  and  attempt 
to  dispose  of  collateral  matters  not  properly  and  regularly  before  him 
in  the  submission  it  will  be  an  usurpation  of  authority  and  power 
which  will  be  curbed  by  the  courts  in  adjudging  void  an  award  that 
attempts  to  decide  extraneous  issues.  7  This  proposition  cannot  be 
stressed  too  greatly,  for  herein  is  the  very  foundation  of  the  jurisdiction 
established  in  the  arbitrator  by  the  submission,  and  upon  its  complete 
understanding  and  proper  application  depend  the  force  and  effect  of  an 
award.  For  it  will  be  fatal  to  the  enforcement  of  an  award,  if  the 
arbitrators  exceed  the  authority  especially  granted  to  them,  and  such 
an  award  will  be  avoided  by  a  court. 8  To  illustrate  further:  A  and  B 
submit  to  three  arbitrators  the  sole  question  of  whether  A  made  a 
certain  shipment  of  goods  within  the  time  specified  in  their  contract, 
and  the  arbitrators  decide  that  it  was  so  made,  but  make  award  in 
favor  of  B  and  excuse  him  from  performance  of  his  part  of  the  con- 
tract, i.  e.,  acceptance  of  the  goods,  because  A  had  failed  to  insure 
the  shipment  for  B's  account.  A  court  will  set  aside  such  award  as 
being  beyond  the  special  jurisdiction  created  by  the  submission. 

§11.  Submission  in  Writing — When  a  submission  is  in  writing 
it  may  be  modified,  enlarged  or  revoked  by  a  writing.*  There  are 
instances  where  the  courts  have  declared  that  a  written  submission 
may  be  altered  orally,  but  the  weight  of  authority  is  the  contrary.  io 

§12.  Oral  Submission — A  submission  may  be  made  orally, 
and  may  similarly  be  modified,  enlarged  or  revoked,  i  The  difficulty 
of  an  oral  submission  and  alteration  thereof  is  one  of  ascertaining  its 
scope  and  the  intent  of  the  parties.  The  evidence  of  an  oral  submission 
must  be  of  the  highest  order.  2 

§13.  Fixing  of  Time  for  Award  in  Submission — Where  the 
submission  fixes  a  time  in  which  the  arbitrators  must  make  their  award, 
the  award  must  be  published  within  the  specified  period.  3  It  having 
been  shown  that  the  submission  creates  the  jurisdiction  of  the  arbi- 
trators, a  time  for  the  making  of  award,  if  stated  therein,  is  a  further 
limitation  upon  the  arbitrators,    and   the  failure  of  the  arbitrators  to 


6.  Toledo  Steamship  Co.  v.  Zenith  Transportation  Co.,  184  Fed.  391,  106  CCA.  501. 

7.  Robinson  v.  Morse,  29  Vt.  404. 

8.  Id. 

9.  Titus  v.  Scantling,  4  Blockf.89;  Byrd  v.  Odem,  9  Ala.  755. 

10.  Efner  v.  Shaw,  2  Wend.  567;  McNear  v.  Bailey,  18  Me.  251;  Morse  on  Arb.  &  Award,  p. 

1.  Fooks  v.  Lawson,  1  Marv.  (Del.)  1151,  40  A.  661. 

2.  Copeland  v.  Hall,  29  Me.  93;  Houghton  v.  Houghton,  37  Me.  72. 

3.  Johnson  v.  Crawford,  212  Pa.  502,  61  A.  1103;  Jordan  v.  Lobe,  34  Wash.  42. 


8  COMMERCIAL   ARBITRATION 

act  within  the  prescribed  time  will  have  the  effect  of  nullifying  an 
award  made  subsequently,  the  same  as  if  the  arbitrators  were  to 
enlarge  the  power  granted  to  them  by  the  submission. 

§14.  Extension  of  Time — The  time  in  which  the  arbitrators 
may  make  an  award  under  a  written  submission  may  be  extended  by 
agreement  of  both  parties  to  the  submission,  and  such  extension  must 
be  in  writing.* 

§15.  Agreement  to  Submit — An  agreement  to  submit  to 
arbitration  a  dispute  arising  out  of  a  contract  will  not  be  specifically 
enforced  by  the  courts,  s  except  where  the  statutes,  as  in  England, 
Canada  and  other  countries  as  well  as  New  York,  cure  the  defect  of 
the  common  law.  In  the  commercial  world,  this  is  a  serious  impediment 
to  the  security  and  sanctity  of  contracts  and  the  safeguarding  of  busi- 
ness. While  recognizing  the  so-called  "arbitration  clause''  in  contracts 
in  daily  use,  merchants  are  faced  with  the  knowledge  that  such  a 
clause  cannot  be  enforced,  (except  in  New  York,  as  noted).  This  rule 
was  early  laid  down  by  dictum  by  Coke  in  the  Vynior  case,  and  has 
been  universally  followed  in  the  various  jurisdictions  of  the  United 
States  and  England,  until  in  the  latter,  by  statutory  enactment,  such 
agreements  are  enforceable;  and  in  New  York  the  statute  of  1920, 
fully  reprinted  in  the  Appendix 6  of  this  work,  makes  such  agreements 
irrevocable. 

The  reason  that  an  agreement  to  arbitrate  will  not  be  specifically 
enforced  is  that  the  parties  by  their  own  act  may  not  oust  the  courts 
of  their  ordinary  jurisdiction. »  It  may  be  remarked  parenthetically 
that  there  is  a  decided  tendency  in  many  jurisdictions  to  overcome  the 
common-law  defects  by  legislative  enactment,  but  the  rule  of  the 
common  law  obtains  in  the  absence  of  statute. 

§16.  Submission  as  a  Condition  Precedent — A  submission 
may  be  made  a  condition  precedent  to  the  right  of  action,8  in  which 
case  it  must  be  made,  or  every  effort  advanced  to  bring  it  about.  9 
Thus,  if  in  an  insurance  contract  it  be  stipulated  that  the  amount  of 
damage  shall  be  determined  or  fixed  by  arbitrators,  submission  to 
such  arbitration  is  a  condition  precedent  to  recover  on  the  agreement.  io 


4.  Johnson  v.  Crawford,  212  Pa.  502,  61 A  1103;  Jordan  v.  Lobe,  34  Wash.  42,  74  P.  817. 

5.  Tudor  v.  Reck,  4  Mass.  242;  Kinney  v.  Baltimore&O.  Employees  Assn.,  35  W.  Va.  385,  14  SE. 
8,  15  LRA.  142;  Hartford  F.  Ins.  Co.  v.  Hon.,  66  Neb.  553,  92  NW.  746,  60  LRA.  436. 

6.  See  Appendix. 

7.  Vynior's  Case,  8  Coke  82,  8  ERC.  357,  2  Am.  &  Eng.  Enc.  Law,  2nd  Ed.  p.  600. 

8.  Dickson  Mfg.  Co.  v.  Am.  Loco.  Co.,  119  Fed.  488;  N.  Y.  Mut.  F.  Ins.  Co.  v.  Alvord,  61  Fed.  752; 
9  CCA.  623;  Russel  on  Arb.,  p.  51. 

9.  Lawrence  v.  White,  131  Ga.  840,  63  SE.  631,  19  LRANS.  966,  15  Am.  Cas.  1097. 

10.    Delaware  etc.  Canal  Co.  v.  Penns.  Coal  Co.,  50  N.  Y.  250-268;  Campbell  v.  American  Peoples 
Life  Ins.  Co.,  8  D.  C.  245,  29  Am.  R.  591. 


COMMON-LAW   ARBITRATION  \) 

Morse,  at  page  93,  says: 

"Or  the  stipulation  may  be,  to  pay  such  sum  as  a  third 
person  shall  determine  to  be  just;  or  it  may  be,  that  work 
shall  be  done  or  materials  furnished,  to  the  satisfaction  or 
acceptance  of  a  third  person;  or  that  the  price  to  be  paid  shall 
be  dependent  upon  his  decision  as  to  the  quantity,  quality,  or 
price  of  the  materials  or  workmanship.  In  each  of  these  cases 
the  action  of  the  third  person  must  take  place  before  the  right 
to  sue  can  mature.  The  duty  of  procuring  the  decision  of  the 
referee  in  cases  like  the  foregoing  rests  primarily  upon  the 
party  who  will  have  the  claim  for  payment;  i.  e.,  upon  the 
plaintiff  in  the  suit  to  be  brought  after  the  right  of  action 
shall  have  accrued.  He  must  use  his  best  exertions  to  bring 
about  and  perfect  the  agreement  of  reference.  And  it  seems 
that  his  failure  to  bring  it  about  will  enable  him  to  institute 
suit  without  it,  only  in  case  the  obstacle  to  his  success  has 
grown  out  of  the  contumacious  action  of  the  other  party. 
The  debtor  cannot,  by  preventing  the  perfection  of  the 
reference,  escape  the  liability  to  be  sued." 

III.     REVOCATION  OF   SUBMISSION. 

§17.  By  Operation  of  Law — Revocation  of  a  submission  in 
law  arises  from  the  legal  effect  and  necessary  consequences  of  some 
intervening  event,  either  happening  after  submission,  or  caused  by 
the  act  of  the  parties,  necessarily  putting  an  end  to  the  business,  i 
The  total  destruction  and  final  end  of  the  subject  matter  will  operate  to 
revoke  a  submission  in  respect  to  it.  2 

§18.  By  Death  of  a  Party — The  death,  before  award,  of  a  party 
to  a  common  law  submission  is  a  revocation  of  the  submission  by 
operation  of  law.  3 

The  rule  is  otherwise  if  there  is  a  stipulation  that  the  submission 
shall    survive.* 

§19.  Lunacy  of  Party — The  lunacy  of  a  party  after  submission 
and  before  award  is  a  revocation  of  the  submission  by  operation  of 
law.  5 


1 .  Toledo  Steamship  Co.  v.  Zenith  Transportation  Co.,  184  Fed.  391, 106  CCA.  501 : 
Calif .  Academy  of  Sciences  v.  Fletcher,  99  Cal.  207,  33  P.  855. 

2.  Id. 

3.  Gregory  v.  Boston  Safe  Deposit,  etc.  Co.,  36  Fed.  408. 

4.  Dawse  v.  Coxe,  3  Bing.  20,  11  ECL.  20,  130  Reprint  420. 

5.  Williams  v.  Banning  Mfg.  Co.,  153  N.  C.  7,  68  SE.  902,  31  LRANS  679. 


10  COMMEECIAL  ARBITRATION 

§20.  By  Death  of  Arbitrator — Where  there  is  no  provision  in 
the  submission  for  filling  a  vacancy,  the  death  of  an  arbitrator  revokes 
the  submission,  s 

§21.  By  Refusal  of  Arbitrator  to  Act — The  refusal  of  an 
arbitrator  to  act  operates  as  a  revocation.  7 

§22.  Bankruptcy  of  a  Party — Bankruptcy  of  a  party  to  a 
submission  of  itself  does  not  revoke  a  submission,  8  but  it  is  the  rule 
that  any  award  subsequently  made  would  not  bind  the  assignee  in 
bankruptcy. 9  On  the  theory  of  a  lack  of  mutuality,  bankruptcy  may 
entitle  the  solvent  party  to  revoke,  as  the  property  has  passed  out  of 
the  control  of  the  bankrupt.  io 

§23.  By  Suit  Involving  Same  Subject  Matter — An  action 
brought,  after  submission  and  before  award,  involving  the  parties  and 
the  same  subject  matter,  will  operate  as  a  revocation,  i 

§24.  Formality  of  Revocation — The  formality  of  the  revoca- 
tion must  follow  and  conform  with  the  formal^  of  submission.  Thus, 
if  the  submission  be  under  seal,  so  also  must  the  revocation;  if  the 
submission  be  in  writing,  the  revocation  must  be  written;  but  if  the 
submission  be  only  verbal,  then  the  revocation  may  be  verbal  also.  2 

§25.  Time  of  Revocation — A  submission  not  made  a  rule  of 
court  may  be  revoked  at  any  time  before  award  of  the  arbitrators.  3 
After  award  neither  party  can  revoke  the  submission,*  for  the  arbi- 
trators have  finished  their  business. 

§26.  Notice  of  Revocation — The  party  revoking  a  submission 
must  give  notice  of  the  revocation  to  the  arbitrators  or  one  of  them.  5 
It  will  not  be  sufficient  for  one  of  the  parties  to  write  a  revocation;  it 
must  be  given  to  the  arbitrators  or  one  of  them.  6 

IV.    ARBITRATOR. 
§27.     Arbitrator  Denned — An  arbitrator  is  a  private  extraor- 
dinary judge,  chosen  by  the  parties  in  dispute,  invested  with  power  to 
decide  same,  i 


6.  Williams  v.  Banning  Mfg.  Co.,  153  N.  C.  7,  68  SE.  902,  31  LRANS  679. 

7.  Parsons  v.  Ambos,  121  Ga.  98,  48  SE.  696;  Grosvenor  v.  Flint,  20  R.  I.  21,  37  A.  304. 

8.  Andrews  v.  Palmer,  4  B.  &  Aid.  250,  6  ECL  471,  106  Reprint  929. 

9.  Marsh  v.  Wood,  9  B.  &  C.  659,  17  ECL.  296,  109  Reprint  245. 
10.    Id. 

1.  Nurney  v.  Firemens  Fund  Ins.  Co.,  63  Mich.  633,  30  NW.  350,  6  Am.  SR.  338. 

2.  Morse  on  Arb.,  p.  232;  Barker  v.  Lees;  2  Keb.  64,  84  Reprint  41;  Vynior's  case,  8  Coke  72,  77  Re- 
print 597,  3  ERC.  357. 

3.  Parsons  v.  Ambos,  121  Ga.  98,  48  SE  696. 

4.  Toledo  Steamship  Co.  v.  Zenith  Transportation  Co.,  184  Fed.  391,  106  CCA.  501. 

5.  Brown  v.  Leavitt,  26  Me.  251;  Williams  v.  Banning  Mfg.  Co.,  153  N.  C.  7,  68  SE.  902,  31  LRANS 
679. 

6.  Morse  on  Arb.,  p.  231. 

7.  Burchell  v.  Marsh,  17  How.  344,  15  L.  ed.  96;  Garred  v.  Macey,  10  Mo.  161;  Cushing  v.  Babcock  , 
38  Me.  452. 


COMMON-LAW  ARBITRATION  11 

B.  Qualification  of  Arbitrator — An  arbitrator,  being  the 
selection  of  the  parties  themselves  is  not  required  to  have  any  espe- 
cial qualification  for  the  position  unless  certain  qualifications  are  speci- 
fied in  the  submission. *  In  earlier  times  there  was  a  question  and 
much  judicial  discussion  as  to  whether  woman  was  qualified  to  act 
as  arbitrator,  but  the  question  was  resolved  in  favor  of  her  full  eligi- 
bility to  so  serve,  and  in  all  jurisdictions  woman  is  qualified  as  an 
arbitrator,  s  and  it  makes  no  difference  if  she  be  feme  sole  orfeme  covert.  *• 
Infants,i  persons  excommunicated,*  outlawed  persons, *  deaf  and 
dumb  persons,*  ministers  of  governments,  s  members  of  ecclesiastical 
courts,  6  committees  of  trade  bodies,  t  fluctuating,  unincorporated 
societies,*  and  sheriffs'  are  competent  to  act  as  arbitrators. 

An  Arbitrator  the  Agent  of  the  Parties — An  arbitrator 
in  a  sense  is  the  agent  of  both  parties.  i»  But  this  requires  some  quali- 
fication. An  arbitrator  bears  the  relationship  of  an  agent  to  both 
parties  in  the  sense  that  either  or  both  may  revoke  the  submission 
to  the  arbitrator,  but  an  arbitrator  has  greater  power  than  a  general 
agent,  and  in  his  representative  capacity  may  have  power  beyond  that 
of  only  one  party.  And  since  an  arbitrator,  by  his  award,  may  direct 
a  party  to  do  or  refrain  from  a  certain  thing  it  would  seem  that  he 
is  invested  with  a  power  higher  than  that  of  agency.  It  has  been  said 
that  an  arbitrator  is  no  more  an  agent  of  the  parties  than  a  court  is 
such  an  agent,  but  there  is  this  manifest  difference — the  authority 
of  the  arbitrator  is  revocable  by  one  or  both  parties  before  award, 
while  the  power  of  the  court  cannot  be  taken  away  by  the  parties 
so  long  as  there  is  jurisdiction  of  the  issue. 

§30.  Appointment  of  Arbitrator — An  arbitrator  is  designated 
or  appointed  by  the  parties,  and  an  arbitration  is  not  begun  until  the 
arbitrator  so  named  has  accepted  the  office,  i  If  the  submission  is  to 
more  than  one  arbitrator  all  must  accept.  If  the  submission  is  to  two 
named  arbitrators  and  that  they  shall  designate  a  third,  the  third 


8.  Russell  on  Arb.  and  Awards,  p.  115. 

9.  Evans  v.  Ives,  15  Phila.  (Pa.)  635. 
10.  Id. 

1.  1  Bacon  on  Arb.  and  Award,  317  D. 

2.  Id 

3.  Id. 

4.  McMillon  v.  Allen,  98  Ga.  405,  25  SE.  505. 

5.  Gernon  v.  Cochran,  10  F.  Cas   No.  536*.  Bee  209. 

6.  Poggenburg  v.  Conniff,  67  Sp.  845. 

7.  Vaughn  v.  Herndon,  9  Tenn.  17  SW.  793. 

8.  Rathven  v.  Elgin,  LR.2H.L.    5535. 

9.  Sharp  v.  Dusenburg,  2  Johns  Cas.  (N.  Y.)  117.    . 
10.  Cuhrer  v.  Askley,  19  Pick.  (Mass.)  300. 

1.  Re  Taylor,  etc.  R.  C.  23  Man.  268. 
Reid  v.  McElderry,  (Ala.)  66  S  7. 


12  COMMERCIAL   ARBITRATION 

arbitrator  so  named  must  likewise  accept.  If  the  submission  is  to  two 
named  arbitrators  who  are  empowered  to  select  an  umpire  in  case  of 
disagreement  of  the  two,  the  necessity  for  and  time  of  appointing  the 
umpire  depends  upon  whether  the  arbitrators  disagree  as  to  their 
award.  An  umpire,  may  be  appointed  at  the  outset  in  order  to  avoid 
the  necessity  of  rehearing  the  evidence  or  he  may  be  selected  upon 
failure  of  the  arbitrators  to  agree.  In  any  event,  an  umpire,  properly 
such,  signs  his  award  alone.  2 

Umpire — An  umpire  is  distinguished  from  a  third  arbitrator,  who 
participates  with  the  other  arbitrators  and  makes  a  joint  award,  in 
that  an  umpire  acts  alone  in  making  his  award. 

§31.     Arbitrator  Must  Be  Disinterested  and  Impartial — The 

first  essential  requirement  of  persons  acting  in  the  capacity  of  arbi- 
trators is  that  they  shall  be  disinterested  in  the  matter  under  submission 
and  be  judicially  impartial  as  between  the  parties. 3  Having  assumed  a 
quasi  judicial  position,  it  is  incumbent  upon  arbitrators  to  maintain 
their  impartial  attitude  throughout  the  hearing,  examination  and 
investigation  of  proofs,  and  the  taking  of  testimony.  If  an  arbitrator 
be  biased,  or  has  expressed  an  opinion  adverse  to  the  interests  of  a 
party  to  the  submission,  or  in  any  manner  acted  prejudicially  to  the 
rights  of  a  party,  an  award  made  by  or  participated  in  by  such  arbitrator 
may  be  avoided  for  misconduct.*  Therefore,  it  follows  that  while  he 
may  have  been  designated  and  appointed  by  one  party,  an  arbitrator 
must  never  be  an  advocate  for  such  party  but  must  act  in  a  judicial 
manner.  5  This  does  not  mean  that,  upon  closing  the  proofs  and  when 
the  arbitrators  shall  have  met  to  make  their  award,  an  arbitrator  is 
precluded  from  expressing  his  own  views  or  opinion  honestly  arrived 
at  in  the  light  of  the  evidence  adduced. 

That  an  arbitrator  shall  be  wholly  disinterested  in  the  outcome  of 
the  issue  requires  some  qualification.  Thus,  if  the  arbitrator  has  an 
interest  in  the  matter  under  submission  and  such  interest  is  known  to 
the  parties,  the  fact  of  his  interest  will  not  disqualify  him  from  acting 
nor  avoid  an  award  which  he  may  make  or  in  which  he  may  participate.  6 
The  misconduct  ascribable  to  an  interested  arbitrator  may  be  said  to 
be  the  concealment  of  interest  from  a  party  to  the  submission. 

The  relationship  of  an  arbitrator  by  affinity  or   consanguinity  7 


2.  Hartford  F.  Ins.  Co.  v.  Bonner  Merc.  Co.,  44  Fed.  151;  11  LRA.  623 

3.  Harvey  v.  Shelton,  7  Beav.  455,  29  Eng.  Ch.  455,  49  Reprint  1141. 
Vineburg  v.  Guirden  F.  etc.  Assn.  Co.  19  Ont.  A  293. 

4.  Silver  v.  Connecticut  River  Lumber  Co.,  40  Fed.  192. 

5.  Western  Female  Seminary  v.  Blair,  1  Disn.  (Oh)  370-79. 

6.  Strong  v.  Strong,  12  Cush.  (Mass.)  135. 

7.  Pool  v.  Hennessey,  39  Iowa  192,  18  AmR.  44. 


COMMON-LAW   ARBITRATION  13 

to  one  of  the  parties  may  raise  a  doubt  as  to  his  eligibility  to  serve, 
particularly  if  the  relationship  is  unknown  to  the  other  party,  and 
it  has  been  said  that  the  court  will  closely  scrutinize  the  acts  of  an 
arbitrator  whose  relation  to  the  party  is  such  as  to  naturally  influence 
the  judgment  even  of  an  honest  man. 8  It  has  been  held  that  the  relation- 
ship of  an  arbitrator  to  an  officer  of  a  company,  party  to  the  submission, 
was  not  sufficient  to  avoid  an  award. 9 

§32.  Business  Relationsof  Arbitrator  and  Party — It  is  especially 
true  in  commercial  arbitraments  that  an  arbitrator  may  have  business 
relations  with  a  part}*;  for  the  vast  majority  of  such  submissions  usually 
are  participated  in  by  arbitrators  and  parties  who  at  some  time  or 
other  of  necessity  have  been  or  will  be  in  close  business  contact.  Fre- 
quently, a  party  submitting  to  arbitration  will  appoint  a  competitor, 
or  one  with  whom  he  has  had  dealings  and  in  whose  judgment  and 
integrity  he  has  confidence.  Unless  the  business  relations  between  the 
arbitrator  and  a  party  to  a  submission  is  of  such  a  nature  as  to  directly 
influence  the  arbitrator's  award,  the  award  will  not  be  voidable.  But 
if  the  business  relations  are  such  as  to  prejudice  the  arbitrator  in  favor 
of  one  party  and  to  the  detriment  of  another,  an  award  so  procured  will 
be  avoided  on  the  theory  of  constructive  misconduct. 

The  fact  that  an  arbitrator  is  an  employee  of  a  party,  io  or  has  acted 
as  an  arbitrator  in  other  submissions  of  a  similar  nature  and  made  an 
award  in  favor  of  that  party,  i  or  bears  the  relationship  of  landlord  2 
or  tenant, 3  or  that  the  arbitrator  was  a  creditor*  or  debtors  of  a  party, 
of  itself  will  not  avoid  an  award.  It  is  the  weight  of  authority  that  such 
relations  must  be  shown  to  have  been  actually  prejudicial  to  a  fair 
hearing  and  honest  award,  based  upon  the  proofs  and  evidence,  in  the 
judgment  of  the  arbitrator,  before  an  award  so  made  will  be  avoided. 

§33.  Oath  of  Arbitrator — Under  a  common-law  submission 
arbitrators  need  not  be  sworn. s  But  if  the  submission  itself  stipulates 
that  the  arbitrators  shall  be  sworn,  the  stipulation  must  be  strictly 
followed.  7 

§34.  Substitution  of  Arbitrator — Neither  party  to  an  arbitra- 
tion has  the  right  to  substitute  an  arbitrator  in  place  of  one  already 


8.  Sweet  v.  Morrison.  116  N.  Y.  19,  22  NE.  276,  15  Am.  S.  R.  376. 

9.  Benning  v.  Atlantic  etc.  R.  Co.,  6  Montr.  Q.  B.  385. 

10.  Martinsburg  etc.  R  Co.  v.  March  114  U.  S.  54£,  5  SCt.  1035,  29  L.  ed.  255. 

1.  Stemmer  v.  Scottish  Union  etc.  Ins.  Co.,  33  Or.  65-73,  49  p.  588. 

2.  Fisher  v.  Towner,  14  Conn.  26. 

3.  Id. 

4.  Bullman  v.  North  British  etc.  Ins.  Co.,  159  Mass.  118,  34  NE.  169. 

5.  Anderson  v.  Burchett,  48  Kan.  153,  29  p.  315. 

6.  Gardner  v.  Newman,  135  Ala.  522-26,  33  S.  179. 

7  Lilley  v.  Tuttle.  52  Colo.  121-28,  117  P.  896,  Amer.  Cas.  1913  II.  196. 


14  COMMERCIAL   ARBITRATION 

named  without  the  consent  of  the  other  party. «  Nor  have  the  arbi- 
trators themselves  the  power  of  substitutions  Thus,  where  there  is  no 
provision  in  the  submission  itself  for  filling  a  vacancy,  the  death  of  an 
arbitrator  acts  as  a  revocation  of  the  submission  and  the  remaining 
arbitrator  or  arbitrators  have  no  power  to  name  his  successor.  10 

V.     PROCEDURE  IN  ARBITRATION. 

§35.  Notice  of  Time  and  Place  of  Hearing — Having  accepted 
their  office,  arbitrators  constitute  a  tribunal,  selected  by  the  contending 
parties,  which  in  its  nature  is  judicial,  and  we  may  now  inquire  into  the 
duties  of  arbitrators,  the  first  of  which  is  to  appoint  a  time  and  designate 
a  place  of  meeting  at  which  the  parties  shall  be  heard.  Both  parties 
must  be  given  notice,  i  The  want  of  notice  is  treated  as  something  akin 
to  a  want  of  service  on  a  defendant  in  an  action  at  law  without  notice 
to  the  parties. 2  It  is  considered  that  the  arbitrators  have  no  jurisdiction 
in  such  a  case  to  hear  and  determine  the  cause  submitted  to  them, 
and  as  a  want  of  jurisdiction  is  good  as  a  defense  to  a  judgment  at  law, 
so  is  the  plea  of  a  want  of  notice  a  good  defense  to  an  action  upon  an 
award.  3 

The  weight  of  authority  fixes  the  duty  of  giving  the  requisite  notice 
to  the  parties  upon  the  arbitrators.  This  notice  must  be  definite  and 
certain  of  the  time  and  place,  although  it  need  not  be  written.* 

As  to  time,  a  party  must  have  reasonable  notice  of  the  hearing  in 
order  that  he  properly  may  prepare  for  same  and  have  the  opportunity 
to  prepare  and  submit  his  case.s  In  this  connection  it  has  been  said 
that  whether  a  notice  was  reasonable  depends  altogether  upon  the 
circumstances  of  the  case,  and  becomes  a  mixed  question  of  law  and 
fact,  proper  for  the  consideration  of  a  jury. 6 

In  general,  notice  to  the  attorney  of  a  party  is  not  notice  to  the 
party,  7  unless  the  submission  so  stipulates,  or  it  may  be  shown  that  the 
party  had  been  for  a  long  time  out  of  the  state  and  his  residence  was 
unknown,  and  that  in  all  the  proceedings  the  party  had  acted  by  counsel 

without  personal  appearance.* 

• 

8.  McCawley  v.  Brown,  12  B.  Mon.  (Ky.)  132. 

9.  Elberton  Hordrone  Co.  v.  Hanes,  122  Ga.  858,  50  SE.  964. 
10.    See  Death  of  Arbitrator,  §  20,  supra. 

1.  Lutz  v.  Linthicum,  8  Pet.  165,  8  L.  ed.  904; 

Continental  Insurance  Co.  v.  Garrett,  125  Fed.  589-91,  60  CCA.  395; 
Curtis  v.  Sacramento,  64  Cal.  102,  28  P.  108. 

2.  Truesdale  v.  Shaw,  58  N.  H.  207;  2  Story  Eq.  Jur.  1452. 

3.  Id. 

4.  Emerson  v.  Udall,  8  Vt.  357-363; 

Vessel  Owners  Towing  Co.  v.  Taylor,  126  111.  250. 

5.  Morewood  v.  Jewett,  25  N.  Y.  Sup.  496; 
Passmore  v.  Pettit,  4  Dall.  (Pa.)  271,  L.  ed.  830. 

6.  Emerson  v.  Udall,  8  Vt.  357-363. 

7.  Rivers  v.  Walker,  1  Dall.  (Pa.)  81,  1  L.  ed.  46. 

8.  Crazier  v.  Blackstock,   1  Del.  362. 


COMMON-LAW   ARBITRATION  15 

The  rule  is  different  where  by  the  submission  itself  no  hearing  is 
contemplated,  but  the  arbitrators  are  to  meet  for  the  purpose  of  deter- 
mining upon  their  award.  Thus,  where  the  parties  had  agreed  to 
submit  a  dispute  to  the  determination  of  an  arbitration  committee 
of  a  designated  exchange,  and  the  submission  was  whether  a  certain 
commodity  was  of  the  grade  and  quality  described  in  a  certain  contract, 
the  arbitration  committee  of  the  organization  designated  in  the  sub- 
mission met  and  made  its  award.  The  losing  party  objected  to  the  award 
on  the  ground  (1)  that  he  had  no  notice  of  the  hearing  and  (2)  that  he 
did  not  appear  and  present  any  evidence. 

Held,  The  parties  having  agreed  that  the  difference  between  them 
be  arbitrated,  and  decided  by  the  arbitration  committee  of  the  exchange 
according  to  the  rules  and  regulations  of  such  exchange,  which  provided 
for  no  notice  to  either  party  of  the  time  and  place  of  hearing,  and  the 
terms  of  submission  providing  for  no  notice,  and  it  having  been  shown 
that  the  committee  in  making  the  award  acted  in  accordance  with  the 
rules  of  the  exchange,  the  award  was  not  void  because  no  notice  was 
given  to  the  defendant  of  the  time  and  place  of  action  by  the  committee 
on  the  matter,  nor  because  the  defendant  did  not  appear  and  submit 
evidence  in  its  behalf,  s 

§36.  All  Arbitrators  Must  Be  Present — As  a  general  rule,  all  the 
arbitrators  named  in  the  submission  must  be  present  at  the  hearings, 
although  only  a  majority  may  participate  in  and  sign  the  award.  i« 
Absence  on  the  part  of  any  one  to  whom  submission  is  made  will  make 
the  award  voidable.  If  the  submission  stipulates  that  all  the  arbitrators 
named  therein  shall  make  the  award,  a  lesser  number  making  the 
award  will  avoid  it.*  And  if  the  submission  requires  that  a  majority 
may  award  it  is  not  necessary  that  all  shall  sign,  but  all  must  be  present 
during  the  hearings,  and  the  weight  of  authority  is  that  all  must  be 
present  during  the  deliberations  of  the  arbitrators,  on  the  theory  that 
a  party  is  entitled  to  the  influence  and  the  exercise  of  judgment  on  the 
part  of  all  arbitrators,  even  though  one  of  them  may  disagree  with  the 
majority.  2 

§37.  Arbitrators  Must  Hear  the  Evidence — Arbitrators  are 
bound  to  receive  evidence  pertinent  to  the  issue,  else  their  award  will 
be  voidable.  3  They  may  limit  the  scope  of  the  testimony  of  a  witness 
and  place  restrictions  upon  his  examination,  but  so  long  as  the  limit a- 


9.    Blakely  Oil.  etc.  Co.  v.  Procter  &  Gamble  Co .,  134  Ga.  139,  67  SE.  389; 

Hughes  v.  Sarpy  County,  97  Neb.  90,  149  NW.  309. 
10.     Emory  v.  Owine^,  7  Gill  (Md  )  488;  48  An.  D.  580. 
1.    Oman.*  v.  Omaha  Water  Co,  218  U.  S.  180,  30  SCt.  615,  54  L.  ed.  991,  48  LRANS.  1084. 

2  Bannister  v.  Read,  6  111.  92. 

3  R.)!>  rts  v  Consumer's  Can  Co.,  102  Ind.  362,  62  A.  585,  11  Am.  SR.  377. 


16  COMMERCIAL   ARBITRATION 

tion  and  restriction  are  honestly  fixed  and  made  and  while  so  made 
embrace  all  of  the  issues  under  submission,  their  act  will  not  be  ques- 
tioned by  a  court. * 

The  duty  of  producing  the  evidence  devolves  upon  the  parties,  for  it 
is  not  the  function  of  arbitrators  to  seek  it  or  to  discover  it  by  their 
own  initiative  or  industry.  However,  arbitrators  are  not  obliged  to 
confine  themselves  to  matter  which  is  offered  by  the  parties  themselves. 
In  their  search  for  the  truth,  they  may  obtain  the  views  of  experts,  s 
and  so  long  as  they  remain  within  the  scope  of  the  submission  and 
decide  the  issue  on  their  own  honest  judgment,  their  award  will  be 
valid. 

It  may  be  stated  as  a  well  established  rule  that,  unless  it  is  the  clear 
intent  of  the  submission  that  no  hearing  shall  be  held  by  the  arbitrators 
in  the  presence  of  the  parties,  both  parties  are  entitled  to  be  present  at 
all  hearings,  examination  of  witnesses,  and  likewise  shall  have  equal 
opportunity  of  questioning  witnesses.  6  Arbitrators,  while  enjoying 
powers  of  unusual  latitude,  may  not  arrogate  to  themselves  the  power 
of  denying  a  fair  and  full  hearing  as  to  all  the  material  issues  under 
submission.  So  also  arbitrators  may  not  receive  ex  parte  statements  or 
communications  from  one  party  without  communicating  them  to  the 
other,  and  it  has  been  held  that  a  communication  from  the  attorney  of 
one  party  to  one  of  three  arbitrators,  of  which  the  adverse  party  was 
not  apprised,  was  cause  for  avoiding  an  award. i 

§38.  May  Adjourn  Hearing — Arbitrators  may  adjourn  the 
hearing  from  day  to  day  and  from  time  to  time,  but  notice  of  the  time 
and  place  of  the  next  hearing  must  be  given  the  parties. 

It  may  be  said  that  arbitrators  must  adjourn  a  hearing  on  good  cause 
shown  by  a  party,  but  a  party  will  not  be  permitted  to  prolong  a  hearing 
beyond  the  time  fixed  in  the  submission  for  making  award.*  Otherwise 
an  award  made  beyond  the  time  limit  would  be  voidable  as  being  made 
beyond  the  jurisdiction  of  the  arbitrators,  and  a  party  by  dilatory 
tactics  could  defeat  the  submission.  A  party  seeking  to  defeat  an 
award  has  the  immediate  remedy  of  revocation  of  submission,  which, 
as  already  noted,  may  be  done  at  any  time  before  award,  upon  due 
notice  to  the  arbitrators.  This  is  especially  true  of  common-law  sub- 
missions, even  though  the  rule  be  different  under  submissions  under 
statute. 


Campbell  v.  Western,  3  Paige  (N.  Y.)  124; 

Com.  v.  La  Fitte,  2  Serg.  &  R.  (Pa.)  106; 

In  re  Small,  23  Ont.  A.  543-46. 

Stone  v.  Baldwin,  226  111.  338,  80  NE.  890. 

Blakeley  Oil  etc.  Co.  v.  Procter  &  Gamble  Co.,  134  Ga.  139,  67  SE.  389. 

Hewitt  v.  Reed  City,  124  Mich.  6,  82  NW.  616,  50  LRA.  128. 

Weir  v.  West,  27  Kan.  650. 


COMMON-LAW   ARBITRATION  17 

§39.  Powers  of  Arbitrators — In  general,  arbitrators  have  a  wide 
latitude  in  their  deliberations  and  it  may  be  said  that  within  the  scope 
of  their  jurisdiction,  which  is  defined  by  the  submission,  they  have 
power,  virtually  unlimited,  to  fix  upon  their  own  method  of  procedure, 
and  so  long  as  it  does  not  transcend  the  principles  of  equity  and  good 
conscience,  and  insures  to  both  parties  a  fair  and  just  hearing,  they 
will  have  fulfilled  the  requirements  of  their  judicial  office. 

As  to  the  procedure  of  arbitrators,  it  may  be  stated  in  a  general 
way  that  the  parties,  having  created  their  own  forum,  cannot  plead 
laxity  on  the  part  of  their  creature  if  they  do  not  insist  upon  compliance 
with  the  technical  procedure  fixed  by  the  rules  of  law  for  the  guidance 
and  protection  of  parties  who  invoke  this  method  of  settling  their 
differences.  The  settlement  of  disputes  by  arbitration  being  favored  by 
the  courts,  9  every  reasonable  intendment  will  be  indulged  in  to  give 
effect  to  such  proceedings.  10 

VI.    AWARD. 

§40.  Award — The  award  is  the  judgment  of  the  arbitrators.! 
At  common-law  it  is  the  basis  of  an  action 2  or  a  good  defense  thereto, 3 
and  is  not  entitled  of  itself  to  be  made  the  judgment  of  court.*  The 
essential  requirements  of  an  award  are  that  it  be  certain, 5  final,*  con- 
clusive?,  determinative  of  the  issue,*  free  from  procurement  by  fraud,* 
collusion,  i°  or  misconduct  1  on  the  part  of  arbitrators.  It  is  likewise 
vital  that  it  shall  be  confined  to  the  jurisdictional  limitations  of  the 
submission  and  not  seek  to  determine  or  settle  issues  beyond  the 
submission.  2 

To  illustrate:  A  and  B  have  a  controversy  concerning  deliveries 
under  a  contract,  B  maintaining  that  A  had  breached  the  contract 
because  of  his  failure  to  ship  goods  within  a  specified  time.  The  con- 
troversy is  submitted  by  the  parties  for  determination  of  the  single 
issue.     Under  the  terms  of  such  a  submission  the  arbitrators  must 


9.  Houston  A  T.  C.  R.  Co.  v.  Newman,  2  Tex.  App.  Civ.  Cas.  (Willson)  303;  Western  Female  Semi- 
nary v.  Blair,  1  Disney  (Ohio)  370. 

10.  Toledo  S.  S.  Co.  v.  Zenith  Transportation  Co.,  106  CCA.  501,  184  Fed.  391. 

1.  Garr  v.  Gomez,  9  Wend.  649. 

2.  Webb  v.  Zeller,  70  Ind.  408;  Dilks  v.  Hammond,  86  Ind.  563. 

3.  Morse  on  Arb.  and  Award,  p.  574,  Turner  v.  Stewart,  51  W.  Va.  493,  41  SE.  924. 

4.  In  re.  Kneiss,  96  Cal.  617,  31  p.  740. 

5.  Connor  v.  Simpson,  104  Pa.  440;  Akely  v.  Akely,  16  Vt.  450. 

6.  Russell  on  Arb.  3rd  ed.  p.  269;  Whitcher  v.  Whitcher,  49  N.  H.  176,  6  Am.  R.  485. 

7.  Akely  v.  Akely,  16  Vt.  450. 

8.  Id. 

S.  Emerson  v.  Udall,  13  Vt.  477. 

10.  Strong  v.  Strong,  9  Cush.  (Mass.)  560. 

1.  Worley  v.  Moore,  77  Ind.  567. 

2.  Garr  v.  Gomez,  9  Wend.  (N.  Y.)  649; 

Consolidated  Water  Power  Co.  v.  Nash.,  109  Wis.  490,  85  NW.  485. 


18  COMMERCIAL   ARBITRATION 

decide  only  the  especial  point  raised  thereby.  If  they  attempt  to  include 
collateral  matter  their  award  will  be  voidable.  It  follows  as  of  course 
that  if  the  submission  be  general  in  character,  as  "the  question  of  time 
of  shipment  of  goods  under  contract  and  all  matters  in  dispute  between 
A  and  B",  the  arbitrators  may  go  into  all  collateral  and  incidental 
questions  of  the  dispute,  whereby  they  may  decide  on  all  features  within 
the  four  corners  of  the  contract  out  of  which  the  controvery  arose. 

An  award  must  be  certain  and  final  as  to  its  terms,  for  that  which 
is  uncertain  or  ambiguous  cannot  be  determinate  of  an  issue,  and  such  an 
award  will  be  avoided.  Since  the  purpose  of  arbitration  is  to  put  an  end 
to  controversy,  if  an  award,  instead  of  settling  the  matter  submitted, 
creates  further  doubt  the  parties  have  been  hindered  rather  than  helped 
toward  a  settlement.  Therefore,  it  is  incumbent  upon  arbitrators  to 
make  their  award  not  only  entirely  understandable  but  certain  and 
definite  as  regards  the  thing  to  be  done  by  the  parties  carrying  out  the 
award.  3 

An  award  should  be  conclusive.  If  such  be  the  issue,  it  should 
fix  the  amount  of  damages  to  be  paid  by  one  party  to  another,  and 
should  not  require  any  other  material  act  to  be  done  by  the  parties 
beyond  the  performance  of  the  award.  If  interest  be  awarded  the  rate 
of  interest  should  be  stated,  and  it  is  feasible  for  arbitrators  to  compute 
the  exact  amount  of  interest  to  be  paid.  But  the  mere  failure  of  arbi- 
trators to  compute  interest  of  itself  is  neither  uncertain  nor  inconclusive, 
for  that  being  a  simple  matter  of  arithmetic,  the  courts,  being  mindful 
that  arbitrations  are  intended  to  do  substantial  justice  and  equity 
between  the  parties,  give  every  reasonable  intendment  to  an  award 
and  the  neglect  of  computing  interest  will  not  be  fatal.* 

An  award  need  not  follow  strict  rules  of  law,s  but  where  an  award 
presumes  to  decide  the  law  an  error  of  law  on  its  face  will  be  ground 
for  vacating  it.  6  If  an  award  be  within  the  submission  and  contains 
the  honest  decision  of  the  arbitrators,  after  a  full  and  fair  hearing  of  the 
parties,  a  court  will  not  set  it  aside  for  error  either  in  law  or  fact. i 

§41.  Award  in  Alternative — An  award  in  the  alternative,  which 
gives  a  party  an  election  of  remedies  is  not  uncertain  nor  lacking  in 
finality.  8  Nor  is  an  award  inconclusive  which  requires  one  party  to 
perform  an  act  before  the  other  shall  be  bound. s 


Lyle  v.  Rogers,  5  Wheat.  394,  5  L.  ed.  117. 

Noyes  v.  McLaSin,  62  111.  474. 

Burchell  v.  Marsh,  17  How.  344,  15  L.  ed.  96. 

Thornton  v.  Carson,  7  Cranch  596,  3  L.  ed.  451. 

Id. 

•Morse  v.  Stoddard,  28  Vt.  445. 

Thompson  v.  Miller,  15  Weekly  Rep.  (Eng.)  353. 


COMMON-LAW   ARBITRATION  19 

§42.  Arbitrators  Must  Publish  Award — The  duty  of  publishing 
their  award  devolves  upon  the  arbitrators.  10  If  the  submission  be  oral 
the  award  may  be  oral.i  If  the  submission  is  written  the  award  must 
be  in  the  same  form. 2  There  is  no  especial  method  prescribed  for 
publishing  the  award,  it  being  sufficient  that  it  be  brought  to  the 
knowledge  of  both  parties.  Thus  it  may  be  delivered  to  one  of  the 
parties  and  by  him  delivered  to  the  adverse  party.  But  prudent  pri- 
vate arbitrators  will  give  copies  of  their  award  to  both  parties  at  the 
same  time  whenever  possible.  Usually  trade  associations  are  at  pains 
to  acquaint  the  parties  simultaneously  with  the  award. 

VII.     ENFORCEMENT  OF  AWARD. 

§43.  Basis  of  Action  or  Defense  Thereto — At  common  law,  an 
award  is  the  foundation  or  basis  of  an  action  or  a  defense  thereto,  and 
can  only  be  enforced  by  a  proceeding  thereon.  3  An  award  must  be  speci- 
ally pleaded.*  It  is  not  entitled  of  itself  to  be  made  a  judgment  of 
court,  but  must  be  proceeded  upon  as  any  other  executed  contracts 

Where  a  common-law  award  has  been  made,  the  stipulation  of  the 
parties  that  it  may  be  entered  as  the  judgment  of  the  court  will  not 
be  given  effect  by  a  court,  and  where  such  award  has  been 
entered  by  the  clerk  in  the  judgment  roll,  the  court  will  not  set  aside 
the  award,  although  all  proceedings  on  the  judgment  may  be  enjoined. « 
This  because  where  a  method  of  arbitration  is  provided  by  statute 
there  must  be  substantial  compliance  with  the  statutory  provisions,  and 
private  parties  may  not  invent  a  procedure  of  their  own  which  con- 
travenes the  law,  and  thereafter  expect  the  courts  to  extend  the  pro- 
tection of  statutory  law  to  them.  While  the  prevailing  party  may 
have  his  cause  of  action  on  the  common-law  award,  he  cannot  obtain  a 
judgment  of  the  court  by  the  mere  entry  of  such  an  award  on  the  judg- 
ment roll  of  the  clerk,  as  is  the  case  under  many  statutes. 

§44.  Submission  Must  Be  Proved — In  an  action  on  an  award, 
the  submission  must  be  proved  as  every  other  contract.  * 

VIII.    AVOIDING  AWARD. 
§45.     Award  Subject  to  Review  of  Court — A  common-law  award 
is  like  unto  any  executed  contract,  and  is  subject  to  the  same  review 


10.  Morse  on  Arb.  and  Award,  p.  285. 

1.  Banert  v.  Eckert,  2  F.  Cas.  No.  837,  Wash.  325. 

2.  Brazill  v.  Isham,  12  N.  Y.  9. 

3.  Morse  on  Arb.  and  Award,  p.  574. 

4.  Piercy  v.  Sabin,  10  Cal.  30,  70,  Am.  Dec.  692. 

5.  Sisson  v.  Pittman,  113  Ga.  166,  38  SE.  315;  In  re  Kreiss,  96  Cal.  617,  31    P.  740. 

6.  In  re  Kreiss,  96  Cal.  617,  31  P.  740. 

7.  Morse  on  Arb.  and  Award,  p.  285. 


20  COMMERCIAL   ARBITRATION 

and  construction  by  the  courts,  and  may  be  reformed,  segregated  or 
altogether  avoided,  depending  upon  the  res  gestae  of  each  case.  There 
are,  however,  certain  general  rules,  applicable  to  all  contracts,  which 
govern  the  law  of  awards.  Of  these,  the  first  may  be  said  to  be  if  an 
award  arise  out  of  an  illegal  contract  it  will  be  void  ab  initio  and  not 
merely  voidable,  for  the  courts  will  not  make  legal  that  which  the  law 
declares  illegal.  Thus  an  award  against  public  policy  would  be  a  nullity. 8 
It  may  be  stated  as  a  general  proposition  that  an  award  will  be 
avoided  on  any  of  the  following  grounds:  (1)  want  of  jurisdiction  in 
the  arbitrators,  i.  e.,  if  they  have  presumed  to  decide  questions  beyond 
the  express  limitations  of  the  submission;*  (2)  for  fraud ;io  (3)  for  col- 
lusion;! (4)  for  misconduct  on  the  part  of  an  arbitrator^  (5)  for  gross 
error; s  (6)  for  mistake  in  the  description  of  some  person  or  property 
therein  vital  to  the  issue;*  (7)  for  uncertainty^  (8)  when  impossible 
of  performance,  s 

First,  as  to  want  of  jurisdiction  in  the  arbitrators:  The  submission 
creates  the  special  jurisdiction  of  the  arbitrators,  and  the  award  neces- 
sarily must  conform  thereto,  else  it  cannot  be  considered  valid.  This  is 
true  not  only  of  the  subject  matter  of  the  submission,  but  as  to  the 
time  of  making  the  award.  If  the  submission  specifies  a  time  in  which 
arbitrators  shall  make  their  award,  failure  on  their  part  to  act  within 
that  time  will  make  any  subsequent  award  void  t  for  the  time  is  as  much 
a  jurisdictional  matter  as  the  other  features  of  the  submission. «  In 
other  words,  upon  the  expiration  of  the  time  fixed  by  the  submission  for 
making  an  award,  the  arbitrators  lose  their  jurisdiction  of  the  subject 
matter,  and  arbitrators  themselves  may  not  enlarge  upon  the  time  any 
more  than  they  may  extend  the  scope  of  the  submission  itself.  The 
parties  may  extend  the  time  or  modify  or  alter  the  submission,  but  it 
is  not  within  the  power  of  the  arbitrators  so  to  do.  9  When  no  time 
for  making  the  award  is  specified,  a  reasonable  time  is  implied,  io  and 
what  is  a  reasonable  time  depends  upon  the  res  gestae  of  each  case. 


8.  Singleton  v.  Benton,  114  Ga.  548,  58  LRA.  181;  Pittsburgh  Construction  Co.  v.  West  Side  Belt 
R.  Co.,  151  Fed.  125. 

9.  Republic  of  Colombia  v.  Cauca  Co.,  190  U.  S.  524,  23  SCt.  704,  47  L.  ed.  1159. 
10.     Strong  v.  Strong,  9  Cush.  (Mass.)  560-74. 

1.  Dickinson  v.  Chesapeake  etc.  R.  Co.,  7  W.  Va.  390. 

2.  Hartford  F.  Ins.  Co.  v.  Bonner  Merc.  Co.,  44  Fed.  151,  11  LRA.  623;  U.  S.  v.  Farragut,  22  Wall. 
406,  22  L.  ed.  879. 

3.  Burchell  v.  March,  17  How.  344,  15  L.  ed.  96; 

Swisher  v.  Dunn,  89  Kan.  412-16,  131  P.  571,  45  LRANS.  810. 

4.  Hewitt  v.  Furman,  16  Serg.  &  R.  (Pa.)  135.     • 

5.  Russell  on  Arb.,  3rd  ed.,  p.  275;  Schuyler  v.  Van  Der  Veer,  2  Caines  235. 

6.  Russell  on  Arb.,  3rd  ed.,  p.  288. 

7.  Galbreath  v.  Galbreath,  10  Ky.  L.  935. 

8.  Lattin  v.  Gamble,  154  Mich.  177,  117  NW.  575. 

9.  White  v.  Purglar,  10  Yerg.  441. 
10.    Haywood  v.  Harmon,  17  111.  477. 


COMMON-LAW   ARBITRATION  21 

Hence,  the  necessity  of    proving  the  submission  in  an  action  upon  an 
award  or  in  pleading  it  in  defense  of  such  action. 

Second,  as  to  the  procurement  of  an  award  by  fraud:  Since  the  law 
does  not  countenance  fraud  in  whatever  guise  it  is  revealed,  an  award 
obtained  by  such  means  will  be  avoided  by  the  courts.  Concealing  facts 
pertinent  to  the  issue  by  a  party,  i  the  falsification  of  documents, 2  the 
false  testimony  of  a  party, J  the  corruption  of  an  arbitrator*  all  fall 
within  the  meaning  of  fraud  and  an  award  surrounded  by  such  circum- 
stances will  be  rendered  void. 

Third,  as  to  collusion:  Being  akin  to  fraud,  collusion  between 
a  party  and  an  arbitrator  will  render  an  award  voidable.  5  Thus,  a  party 
having  a  secret  understanding  with  an  arbitrator  whereby  the  adverse 
party  is  deprived  of  a  fair  and  just  adjudication  of  the  issue,  will  be 
ground  for  avoiding  an  award  so  procured. 

Fourth,  as  to  misconduct  on  the  part  of  an  arbitrator:  This  opens 
up  a  discussion  of  wide  latitude,  and  calls  for  some  qualification.  Mis- 
conduct may  be  wilful  and  therefore  reprehensible,  while  on  the  other 
hand  misconduct  in  a  legal  sense  may  arise  in  a  multitude  of  ways  and 
at  the  same  time  the  arbitrator  be  not  conscious  of  it.  The  interest 
of  an  arbitrator  in  the  subject  matter  of  a  submission^  unknown  to  a 
party  or  parties,  would  be  denominated  misconduct,  the  same  springing 
from  the  interest  unrevealed;  or  the  relationship  of  an  arbitrator  to 
a  party,  7  unknown  to  the  adverse  party,  would  be  in  the  same  category. 
But  the  more  common  application  of  the  term  misconduct  may  be  said 
to  be  the  failure  of  the  arbitrators  to  give  notice  of  the  time  and  place 
of  meeting  for  the  purpose  of  hearing  the  evidence;*  their  refusal  to 
postpone  a  hearing  on  good  cause  shown; 9  their  refusal  to  hear  a 
witness  produced  by  a  party;  10  their  refusal  to  permit  the  questioning 
of  a  witness  by  either  or  both  parties ;i  receiving  ex  parte  statements 
from  one  party  and  not  communicating  the  same  to  the  adverse  party; 2 


1.  Newburgport  Marine  Ins.  Co.  v.  Oliver,  8  Mass.  402;  Teal  v.  Bilby,  123  U.  S.  572,  8  SCT.  239, 
31  L.  ed.  263 

2.  Id. 

3.  Bulkley  v.  Starr,  2  Day  552;  Lankton  v.  Scott,  Kirby  356. 

4.  Tracy  v.  Herrick,  25  N.  H.  381;  Van  Cortland  v.  Underhill,  17  Johns,  (N.  Y.)  405. 

5.  Emerson  v.  Udall,  13  Vt.  477. 

6.  Morse  on  Arb.  and  Award,  p.  100. 

7.  Brown  v.  Leavitt,  26  Maine  251; 
Strong  v.  Strong,  9  Cush.  560. 

8.  Hollingsworth  v.  Leiper,  1  Dall.  161; 
Herrick  v.  Blair,  1  Johns,  (N.  Y.)  101. 

9.  Passmore  v.  Pettit,  4  Dall,  271; 
Forbes  v.  Frary,  2  Johns.  224. 

10.     Morse  on  Arb.  and  Award,  p.  142. 

1.  Lutz  v.  Linthicum,  8  Peb.  165  8  L.  ed.  904. 

2.  Moshier  v.  Shear,  102  111.  169,  40  Am.  R.  573. 


22  COMMERCIAL  ARBITRATION 

taking  counsel  of  the  attorney  of  one  of  the  parties; 3  hearing  a  witness 
in  the  presence  of  only  one  party;*  acting  not  upon  their  own  volition 
and  instigation,  but  under  the  direction  of  one  of  the  parties  ;5  if,  after 
the  closing  of  testimony,  they  receive  evidence  from  one  of  the  parties 
or  his  attorney^  or  if  one  or  more  of  the  arbitrators  be  prejudiced 
against  a  party  or  had  previously  expressed  an  opinion  adverse  to  the 
interests  of  a  party. i 

If  the  submission  is  to  several  arbitrators  jointly,  it  is  misconduct 
if  all  of  the  arbitrators  do  not  meet  together  for  the  purpose  of  dis- 
cussing and  making  their  award,  even  though  a  majority  only  make 
the  award  and  a  minority  refuse  to  participate  therein.  8 

Fifth,  as  to  gross  error:  The  want  of  that  diligence  which  even 
careless  men  are  accustomed  to  exercise  may  be  denominated  gross 
error  in  its  application  to  an  award,  and  implies  an  inexcusable  disre- 
gard and  consideration  of  facts  surrounding  the  matter.  Since  a  court 
will  not  avoid  an  award  for  mere  mistake  of  either  law  or  fact,  so  long  as 
it  is  honestly  made  by  the  arbitrators,  it  may  be  said  that  gross  error 
is  leaving  that  undone  or  unconsidered  which  in  the  ordinary  course  of 
usual  events  should  unquestionably  have  been  done  or  considered. 

Sixth,  as  to  mistake  in  the  description  of  some  person  or  property 
vital  to  the  issue:  It  is  axiomatic  that  an  award  which  on  its  face 
shows  a  mistake  in  the  description  of  some  person  or  property  vital  to 
the  issue  will  be  avoided  by  the  courts.  For  example,  if  the  submission 
involves  goods  of  a  certain  kind  and  description,  an  award  as  to  goods 
of  an  entirely  different  kind  will  not  be  valid.  Or,  if  a  party  to  the  sub- 
mission be  erroneously  designated  and  identified  in  the  award  it  is 
obvious  that  such  award  would  be  invalid.  A  mere  clerical  error  or 
mistake  in  transmission,  which  may  be  readily  corrected,  is  not  sufficient 
to  invalidate  an  award. 9 

Seventh,  as  to  uncertainty:  If  by  the  award  the  thing  or  things  to 
be  done  by  a  party  or  parties  is  not  capable  of  understanding,  a  court 
will  set  aside  the  award  for  uncertainty.  io  As  has  been  said  before,  the 
purpose  of  arbitration  is  to  put  an  end  to  controversy,  and  if  the  award 
is  uncertain  in  its  ordinary  terms  it  has  failed  of  its  purpose. 


McCausland  v.  Tower,  14  N.  B.  125. 

Lutz  v.  Linthicum,  8  Peb.  165,  8  L.  ed.  904. 

Hartford  F.  Ins.  Co.  v.  Bonner  Mercantile  Co.,  44  Fed.  151,  11  LRA  623. 

Strong  v.  Strong,  9  Cush.  (Mass.)  560. 

Id. 

Morse  on  Arb.  and  Award,  p.  151. 

Solomons  v.  McKinstry,  13  Johns  (N.  Y.)  27. 

Morse  on  Arb.  and  Award,  p.  408. 


COMMON-LAW   ARBITRATION  23 

Eighth,  when  impossible  of  performance:  An  award  requiring  a 
party  to  perform  that  which  is  obviously  impossible  is  void. 

§46.  In  General — It  may  be  stated  as  a  general  proposition  that 
if  an  award  shows  error  or  miscalculation  on  its  face,  a  court  has  no 
power  to  correct  it,  unless  the  submission  be  made  a  rule  of  court. i 
Also,  if  an  award  be  valid  as  to  part  and  invalid  as  to  part,  and  the  two 
parts  are  devisable,  it  will  be  reformed,  but  not  otherwise. 2 

If  an  award  in  part  exceeds  the  submission  it  will  be  annulled, 
unless  the  matter  decided  within  the  scope  of  the  submission  may  be 
separated  from  that  not  properly  included  therein  without  amending 
or  abridging  the  issue.  3  Since  the  court  cannot  control  the  scope  of  the 
submission,  it  will  not  reform  an  award  to  enlarge  the  submission.* 

AY  here  interest  is  allowed  a  party  under  an  award,  the  failure  to 
compute  the  amount  of  interest  will  not  avoid  the  award  for  either 
uncertainty  or  inconclusiveness,  the  computation  being  a  simple  matter 
of  arithmetic. s 

If  arbitrators,  after  the  close  of  testimony,  receive  evidence  from 
one  of  the  parties,  or  from  his  attorney,  it  will  be  considered  miscon- 
duct and  sufficient  cause  to  vacate  the  award  ;6  and,  if  it  be  expressly 
agreed  that  neither  party  is  to  be  represented  by  counsel,  the  submis- 
sion of  authorities  by  counsel  for  one  of  the  parties  after  the  close  of 
testimony,  will  be  a  violation  of  the  spirit  of  the  submission,  and  will 
avoid  the  award. 7 

Where  a  trade  association,  chamber  of  commerce  or  exchange  has  a 
regular  or  standing  arbitration  committee,  without  the  right  of  sub- 
stitution thereon,  and  upon  submission  to  such  committee  another 
than  a  regular  member  of  the  aforesaid  committee  is  called  upon  and 
acts  in  place  and  stead  of  the  regular  member  and  award  made  by  the 
committee  so  constituted  will  be  avoided,  it  having  been  held  that  the 
proceedings  of  the  arbitration  committee  were  irregular  and  contrary 
to  the  rules  of  the  organization.  It  follows  that  where  an  organization 
or    commercial    body    holds    itself    out    as    having    certain   rules    of 


1.  Commonwealth  v.  Pejepscut  Proprietors,  7  Mass.  399. 

2.  De  Groot  v.  U.  S.  5  Wall.  419,  18  L.  ed.  700; 
Butler  v.  Mayor,  etc.  7  N.  Y.,  1  Hill,  489; 

Auriol  v.  Smith,  1  Turn.  &  R.  121,  12  Eng.  Ch.  119,  37  Reprint  1041. 

3.  Republic  of  Colombia  v.  Cauca  Co.,  190  U.  S.  524,  23  SCT.  704,  47  L.  ed.  1159. 

4.  Lazell  v.  Houghton,  32  Vt.  579. 

5.  Noyes  v.  McLaffin,  62  111.  474. 

6.  McCausland  v.  Tower,  14  N.  B.  125; 
Moshier  v.  Shear,  102  111.  169,  40  Am.  R.  573. 

7.  Lattin  v.  Gamble,  154  Mich.  177,  117  NW.  575. 


24  COMMERCIAL  ARBITRATION 

procedure  and  parties  submit  in  accordance  with  such  rules,  there  must 
be  strict  compliance  therewith,  else  the  award  will  be  rendered  void. 8 

However,  if  a  party  to  a  submission  having  notice  of  any  irregularity 
in  the  procedure  of  arbitrators,  or  knowledge  of  the  interest  of  an 
arbitrator,  or  his  relationship  with  a  party,  or  of  any  other  deficiency, 
fails  and  neglects  to  protest  against  such  condition  at  the  time  and 
proceeds  with  and  participates  in  the  hearing  without  formal  revocation 
he  will  be  estopped  from  pleading  such  irregularity. 


8.    Blakeley  Oil  etc.  Co.  v.  Procter  &  Gamble  Co.  134  Ga.  139,  67  SE.  389. 


STATUTORY    ARBITRATION  25 


Statutory  Arbitration 

§47.  In  General — Usually,  the  statutes  in  the  various  states  are 
declaratory  of  what  the  common  law  is  and  they  do  not  abrogate  the 
common  law  on  the  subject. 8  Submission  to  common  law  arbitration 
is  permissible  in  jurisdictions  having  a  statutory  method  provided, 
but  a  common  law  award  will  not  be  considered  as  a  statutory  award 
and  judgment  entered  therein  as  provided  by  statute. 9 

§48.  What  May  be  Submitted  Under  Statute— Statutes 
generally  provide  for  the  submission  of  any  controversy  which  might 
be  the  subject  of  a  civil  action,  except  a  question  of  title  to  real  property 
in  fee  or  for  life.  This  qualification  does  not  include  questions  relating 
merely  to  the  partition  or  boundaries  of  real  property. 

§49.  Who  May  Submit — Any  person  capable  of  contracting 
may  submit  a  dispute  to  arbitration,  and  there  are  the  same  limitations 
under  the  statute  as  are  set  forth  in  §8,  ante. 

§50.  Submission  in  Writing — Statutes  generally  provide  that 
submissions  shall  be  in  writing.10 

§51.     When   Submission   Entered  as  an    Order    of  Court — 

When  stipulated  in  the  submission  that  it  be  entered  as  an  order  of 
court,  there  must  be  strict  compliance  with  every  requirement  of  the 
statute,  since  the  court s^ take  jurisdiction  of  the  subject  matter  only  by 
virtue  of  the  statute. i  It  will  thus  be  seen  that  the  submission  entered 
as  an  order  of  court  is  wholly  jurisdictional.  If  the  statute  provides 
the  particular  court  in  which  the  submission  must  be  filed,  another 
jurisdiction  will  be  without  power  to  act  thereunder. 2 

§52.  Arbitrators  Named  in  Submission — The  general  rule  is 
that  arbitrators  must  be  named  in  the  submission^  but  this  rule  is 
varied  when  the  submission  runs  generally  to  a  designated  committee 
of  a  named  organization  when  such  organization  is  empowered  by  its 
charter  to  conduct  arbitrations  by  a  regularly  appointed  committee.* 

§53.  No  Power  of  Substitution — Unless  the  submission  itself 
stipulates  that  substitution  may  be  made  by  remaining  arbitrators  in 

8.  Solinas  v.  Stillman,  66  Fed.  677;  Hartford  F.  Ins.  Co.  v.  Bonner  Merc.  Co.,  44  Fed.  151,  11 
LRA  623. 

9.  Kneiss  v.  Hotaline,  96  Cal.  617,  31  P.  740. 
10.    Boots  v.  Canine,  94  Ind.  408. 

1.  Pieratt  v.  Kennedy,  43  Cal.,  393; 
Ryan  v.  Daugherty,  30  Cal.  218. 

2.  Morgan  v.  Smith,  33  Kan.  438,  6  P.  569. 

3.  Kneiss  v.  Hotaling,  96  Cal.  617,  31  P.  740;   In  re  Joshua  Hendy  Mach.  Works,  9  Cal.  A.  610-11, 
99  P.  1110. 

4.  Blakeley  Oil  etc.  v.  Procter  &  Gamble,  134  Ga.  139,  67  SE.  389. 


26  COMMEBCIAL   ARBITRATION 

the  event  of  the  death,  incapacity  or  inability  of  an  arbitrator  to  act, 
arbitrators  have  no  power  of  substitution^  If  substitution  is  allowed  by 
the  submission,  the  substitution  must  be  filed  with  the  court  having 
jurisdiction,  the  same  as  if  the  substitute  were  an  original  appointee. 

§54.  Umpire — In  several  jurisdictions,  arbitrators,  acting  under 
the  statute,  have  no  power  to  select  an  umpire.  6 

X.    PROCEDURE 

§55.  Arbitrators  Must  be  Sworn — The  general  rule  is  that 
arbitrators  acting  under  statute  must  be  sworn  before  an  officer  au- 
thorized to  administer  oaths,  faithfully  and  fairly  to  hear  and  examine 
the  allegations  and  evidence  of  the  parties  in  relation  to  the  matters 
in  controversy,  and  to  make  a  just  award  according  to  their 
understanding.  7 

§56.  Arbitrators  Must  Meet  Together — All  the  arbitrators 
must  meet  and  act  together  during  the  inquiry  or  investigation,  but 
when  met  a  majority  may  determine  any  question. 8 

§57.  Notice  of  Time  and  Place  of  Hearing — Arbitrators  must 
give  notice  of  the  time  and  place  of  hearing  to  both  parties,  for  it  will 
be  fatal  to  the  validity  of  an  award  if  only  one  party  have  notice  and 
the  opportunity  to  be  heard. 9 

§58.  Arbitrators  Must  Hear  the  Evidence — Under  the  statute, 
as  at  common  law,  arbitrators  must  hear  all  of  the  evidence  offered 
by  both  parties,  and  such  evidence  must  be  taken  in  the  presence 
of  both  parties.  Arbitrators  may  not  receive  ex  parte  statements 
from  either  party. 

§59.  May  Adjourn  Hearing — Arbitrators  may  adjourn  the  hear- 
ing from  day  to  day  and  from  time  to  time,  and  they  must  give  notice 
to  the  parties  of  the  time  and  place  of  the  next  meeting.  io 

§60.  Powers  of  Arbitrators — Under  many  statutes,  arbitrators 
have  the  power  to  swear  witnesses  and  to  issue  subpoenas  duces  tecum. 
In  other  jurisdictions,  the  court  issues  subpoenas  at  the  request  of  the 
arbitrators. 


5.  Elberton  Hardware  Co.  v.  Hawes,  122  Ga.  858,  50  SE.  964. 

6.  McMahan  v.  Spinning,  51  Ind.  187. 

7.  Warren  v.  Tinsley,  53  Fed.  689,  3  CCA.  613. 

8.  Cumberland  v.  North  Yarmouth,  4  Me.  459;  Haven  v.  Winnisimmet  Co.  11  Allen  (Mass.)  377, 
87  Am.  D.  723. 

9.  Blodgett  v.  Prince,  109  Mass.  44. 

10.  Frey  v.  Vanlear,  1  Serg.  &  R.  (Pa.)  435. 


STATUTORY   ARBITRATION  27 

Arbitrators  have  no  power  to  vary  the  terms  of  the  submission,  nor 
to  make  rules  at  variance  with  the  statute.!  Nor  may  they  enlarge 
upon  the  time  fixed  in  the  submission  for  making  the  award.  Their 
duty  is  to  act  within  the  time  limit,  and  in  many  jurisdictions  the  court 
may  compel  arbitrators  to  make  an  award. 2 

XI.     AWARD. 

§61.  Must  be  in  Writing — The  general  rule  is  that  awards  made 
under  the  statute  must  be  in  writing. 

§62.  Certainty  of  Award — An  award  must  be  certain  and  final  as 
to  its  terms,  and  within  the  scope  of  the  submission. 

§63.  Entry  of  Award  as  Judgment  of  Court — It  has  been 
stated  that  when  a  submission  presumes  to  be  under  the  statute,  there 
must  be  strict  compliance  therewith. 3  As  for  example,  when  under 
the  California  code,  when  the  submission  is  made  an  order  of  the  court, 
the  award  must  be  filed  with  the  clerk,  and  a  note  thereof  made  in 
his  register.  After  the  expiration  of  five  days  from  the  filing  of  the 
award,  upon  the  application  of  a  party,  and  on  his  filing  an 
affidavit,  showing  that  notice  of  filing  the  award  has  been  served  on  the 
adverse  party  or  his  attorney,  at  least  four  days  prior  to  such  applica- 
tion, and  that  no  order  staying  the  entry  of  judgment  has  been  served, 
the  award  must  be  entered  by  the  clerk  in  the  judgment  book,  and 
thereupon  has  the  effect  of  a  judgment.* 

§64.  Causes  for  Vacating  Award — The  court,  on  motion,  may 
vacate  the  award  upon  either  of  the  following  grounds,  and  may  order 
a  new  hearing  before  the  same  arbitrators  or  not,  in  its  discretion: 

(1)  That  it  was  procured  by  corruption  or  fraud; 

(2)  That  the  arbitrators  were  guilty  of  misconduct,  or  committed 
gross  error  in  refusing,  on  cause  shown,  to  postpone  the  hearing,  or  in 
refusing  to  hear  pertinent  evidence,  or  otherwise  acted  improperly, 
in  a  manner  by  which  the  rights  of  the  party  were  prejudiced; 

(3)  That  the  arbitrators  exceeded  their  powers  in  making  their 
award;  or  that  they  refused,  or  improperly  omitted,  to  consider  a  part 
of  the  matter  submitted;  or  that  the  award  is  indefinite,  or  cannot  be 
performed. 


1.  Morse  on  Arb.  and  Award,  P.  177. 

2.  Johnson  v.  Crawford,  212  Pa.  502,  61  A.  1103. 

3.  Kettleman  v.  Treadway,  65  Cal.  505,  4  P.  506. 

4.  In  re.  Knei.ss,  %  Cal.  617,  31  P.  740. 


28  COMMERCIAL   ARBITRATION 

§65.  Court  May  Modify  or  Correct  Award — The  court  may,  on 
motion,  modify  or  correct  the  award,  where  it  appears : 

(1)  That  there  was  a  miscalculation  in  figures  upon  which  it  was 
made,  or  that  there  is  a  mistake  in  the  description  of  some  person  or 
property  therein; 

(2)  When  a  part  of  the  award  is  upon  matters  not  submitted, 
which  part  can  be  separated  from  other  parts,  and  does  not  affect  the 
decision  on  the  matters  submitted; 

(3)  When  the  award,  though  imperfect  in  form,  could  have  been 
amended  if  it  had  been  a  verdict,  or  the  imperfection  disregarded. 

§66.  Decision  Subject  to  Appeal — The  decision  upon  motion  is 
subject  to  appeal  in  the  same  manner  as  an  order  which  is  subject  to 
appeal  in  a  civil  action;  but  the  judgment  entered  before  a  motion  made 
cannot  be  subject  to  appeal. 


REPORTS  29 

Reports  of  Commercial  Arbitrations 

Scope — In  presenting  the  Reports  of  Commercial  Arbitrations  in 
the  following  pages,  the  authors  desire  to  emphasize  that  the  arbitra- 
ments are  not  decisions  of  courts,  but  are  the  decisions  and  awards 
of  committees  of  various  trade  and  commercial  bodies  and  in  the  main 
come  under  the  classification  of  common-law  awards. 

In  compiling  the  reports  care  has  been  exercised  to  give,  so  far  as 
possible,  the  facts  surrounding  each  individual  matter,  in  order  that 
the  reader  may  inform  himself  of  the  especial  points  under  submission, 
synopses  of  the  arguments  thereon  and  the  view  taken  of  the  whole  by 
the  various  arbitrators.  To  accomplish  this  it  has  been  necessary  to 
resort  to  the  original  documents  in  many  cases,  as  the  findings  and 
awards  themselves  were  not  sufficiently  explanatory  of  the  submissions. 

The  reader  will  note  that  arbitrators  frequently  have  interpreted 
trade  rules  and  trade  customs  and  have  been  at  pains  to  explain  the 
purpose  and  meaning  of  certain  clauses  in  contracts,  thereby  determining 
authoritatively  trade  custom  as  regards  the  particular  issue  involved. 
This,  in  itself,  makes  this  work  distinctive  and  dependable.  In  any 
event,  these  precedents  unquestionably  will  prove  of  value  to  the 
merchant  facing  situations  similar  to  those  adjudicated  by  commercial 
bodies. 

Insofar  as  possible  the  arbitrations  have  been  classified  under 
different  headings  in  order  that  each  subject  may  be  followed  to  its 
conclusion.  However,  the  very  wide  range  of  subjects  treated  has 
not  made  this  feasible  in  every  instance,  for  at  times  more  than  one 
issue  was  involved  in  a  single  submission.  Therefore,  as  a  further  aid 
to  those  using  the  volume,  head-notes  have  been  provided  and  proper 
cross-notes  inserted  for  ready  reference.  For  example,  under  the  heading 
"Rejection"  will  be  found  many  head-notes  epitomizing  each  individual 
matter  involving  a  rejection  on  account  of  non-compliance  with  some 
contract  provision,  as  the  time  of  shipment  clause.  Thus  the  reader 
may  easily  follow  the  head-notes  and  refer  to  the  page  upon  which  is 
given  the  arbitration  deciding  the  particular  issue. 

Many  hundreds  of  arbitrations  involving  solely  questions  of  quality, 
that  is  to  say,  whether  goods  were  of  the  grade  and  description  specified 
in  contracts,  have  been  examined,  but  these  have  not  been  touched 
upon  for  the  obvious  reason  that  they  would  prove  of  little  or  no  value. 
Enlightened  merchants  in  all  fines  of  business  usually  leave  to  persons 
more  or  less  expert  in  their  respective  lines  the  determination  of  grades, 
values  and  comparisons  with  standards  established  for  commodities, 
and  abide  by  the  opinions  of  such  experts.   It  is  unqualifiedly  true  that 


30  Kl     COMMERCIAL  ARBITRATION 

without  this  intelligent  method  of  determining  grades  and  of  evaluation, 
business  in  many  lines  virtually  would  be  at  a  standstill. 

I  In  presenting  the  Reports,  the  authors  have  refrained  from  comment 
thereon,  as  in  their  opinion  this  would  serve  no  good  purpose,  but  on 
the  contrary  might  be  provocative  of  controversy.  In  rare  instances 
there  will  be  noted  seeming  conflict  between  arbitrators'  decisions 
on  similar  issues,  but  instead  of  implying  error  in  any  one  case  the 
authors  believe  it  better  to  assume  that  the  issue  was  decided  equitably 
by  the  arbitrators  in  each  individual  case.  Impartial,  disinterested 
arbitrators  are  in  position  better  to  judge  the  merits  of  a  matter  than 
is  a  commentator  viewing  it  from  a  distance. 

Therefore,  the  Reports  are  commended  to  the  earnest  consideration 
of  the  business  and  professional  reader  for  the  intrinsic  good  that 
is  in  them. 


REPORTS  31 


Agency 


Responsibility  of  Seller  When  He  Voluntarily  Becomes 
Buyer's  Agent  in  Delivering  Goods  Sold  to  Third  Party — Term 
F.  O.  B.  Named  Plant — Reimbursement  for  Loss  of  Profit  Not 
Allowed — A,  a  California  packer  sold  to  B,  a  New  York  merchant,  a 
carload  of  Prunes  F.  0.  B.  cars  San  Jose,  California,  November  de- 
livery. B  resold  to  C.  B  requested  A  to  act  as  his  agent  in  effecting 
delivery  to  C  for  B's  account,  and  gave  instructions  to  A  to  ship  the 
goods  to  a  Santa  Clara  plant  for  inspection.  A  refused  to  ship  from  his 
plant  until  after  acceptance,  as  the  contract  called  for  F.  0.  B.  San 
Jose  plant.  Thereupon  B  wired  A  on  November  24th  as  follows: 

Skip  car  as  per  instructions.     Waive  right  of  inspection  at 
packing  house.    Have  bought  this  car  on  regular  terms.    Simply 
asking  you  make  delivery  as  you  would  do  for  yourself.     Assume 
all  responsibility. 
A  replied  to  this  message  on  November  24th  as  follows: 

Will  ship  car  as  requested,  but  if  this  procedure  causes  any 
delay  which  interferes  with  replacement  or  making  new  tender 
this  month  in  case  of  rejection,  disclaim  any  responsibility  as 
should  have  ample  time  arrange  replacement  on  stipulated  sales 
terms  of  acceptance. 
B  also  authorized  A  to  make  collection  of  the  invoice  from  C  and 
remit  the  difference  between  the  price  to  be  paid  by  B  to  A  and  the 
price  at  which  C  had  purchased  from  B,  retaining  the  original  cost 
of  the  goods.    In  carrying  out  the  instructions,  A  made  shipment  to 
Santa  Clara,  and  upon  inspection  November  30th  C  rejected  a  portion 
of  the  shipment  and  accepted  and  paid  for  a  portion.    Thereupon  B 
made  claim  on  A  for  loss  of  profit  on  the  resale  in  the  sum  of  $1,649.99, 
alleging  that  A  had  not  shipped  goods  of  contract  grade. 

C  called  for  arbitration  with  B,  and  received  an  award  granting 
him  an  allowance  of  two  cents  a  pound  on  the  rejected  portion  of  the 
shipment. 

A  and  B  then  submitted  the  following  question  to  arbitrators: 
Did  A  fulfill  his  obligation  withB  on  sale  originally  confirmed 
November  22,  1920,  and  if  not,  should  A  reimburse  B  for  loss  of 
profit  sustained  by  B  through  A 's  failure  to  fulfill  such  obligation? 
Held,  That  the  sale  was  F.  O.  B.  plant  San  Jose,  and  A  made 
shipment  in  accordance  with  the  contract  of  sale,  and  profits  not  being 
a  part  of  the  contract,  B's  claim  for  loss  of  profit  is  disallowed,  with 
costs  to  B.    (Dried  Fruit  Association  Arbitration  No.  10,  1921). 


32  COMMERCIAL   ARBITRATION 

Damages  for  Breach  of  Agency — A  entered  into  ah  agency 
contract  with  B,  engaged  in  business  at  Halifax,  Nova  Scotia,  in  May, 
1910.  By  the  terms  of  the  agency,  B  was  to  be  protected  in  his  territory 
on  certain  brands,  labels  and  cartons.  On  June  1st  of  that  year,  B 
forwarded  an  order  for  a  large  quantity  of  Prunes  and  assorted  Raisins. 
In  his  communication  B  stated  that  he  would  leave  the  filling  of  his 
order  to  the  good  judgment  of  A,  who  was  a  packer  and  therefore  in  a 
position  better  to  judge  the  condition  of  the  market.  The  letter  above 
referred  to,  contained  this  sentence: 

"We  will  never  hold  you  to  any  quoted  figures,  knowing 
you  will  always  do  yoar  best  for  us,  and  knowing  how 
uncertain  the  market  is." 

A  never  acknowledged  this  communication,  and  under  date  of 
June  23,  1910,  B  sent  a  copy  thereof,  expressing  the  opinion  that  it 
never  had  been  received.  On  July  6,  1910,  A  wrote  B  stating  that  the 
order  had  not  been  booked.  This  communication  was  received  by  B 
on  July  16,  1910.  Meanwhile,  the  goods  had  been  sold  to  other  Nova 
Scotia  buyers  under  the  specific  brands  embraced  in  the  agency  con- 
tract. In  the  end  B  was  forced  to  accept  and  pay  for  goods  at  A's  then 
price,  which  was  considerably  higher  than  that  prevailing  at  the  time 
the  original  order  was  forwarded.  B  demanded  reimbursement  for  the 
excess  paid  and  A  contested  the  claim,  alleging  that  no  sale  had  been 
made. 

Held,  That  the  letter  of  B  can  be  construed  in  no  other  sense  than 
an  order,  and  B  had  a  right  to  assume  that  his  order  had  been  booked. 
Although  no  telegraphic  confirmation  was  sent,  neither  was  the  order 
declined.  By  the  sale  of  specific  brands  to  other  concerns,  B  was  at  the 
mercy  of  A.  All  of  B's  communications  show  earnest,  though 
unbusinesslike,  methods  on  his  part  and  the  course  of  A  also  is 
criticised.  B  is  entitled  to  recover  from  A  the  difference  in  the  market 
price  at  the  time  order  was  received  and  the  price  on  the  date  A  finally 
filled  the  order.  (Dried  Fruit  Association  of  California  Arbitration 
No.  3,  1910). 


REPORTS  33 

Broker 

The  general  rule  is  that  the  principal  is  responsible  for  the  acts  or 
omissions  of  his  broker,  within  the  scope  of  the  broker's  authority. 

Failure  of  a  broker  to  transmit  all  of  the  conditions  of  a  sale,  such 
as  a  requirement  of  immediate  shipment,  will  not  excuse  the  principal 
in  failing  to  make  immediate  shipment,  and  responsibility  for  such  an 
omission  rests  entirely  upon  the  principal  for  whom  the  broker  acted 
(California  Bean  Dealers  Association  Arbitration  No.  19, 1918,  Page  33) 

Notice  to  Seller's  broker  of  inability  to  effect  shipment  within 
contract  period  is  not  notice  to  Buyer,  and  Seller  will  not  be  excused 
from  fulfilling  his  contract  covering  Raisins  because  of  such  insufficient 
notice.  (Dried  Fruit  Association  of  California  Arbitration  No.  128, 
1918,  Page  33). 

Principal  Responsible  for  Broker's  Omission — A  purchased 
a  carload  of  Beans  through  a  broker,  memorandum  of  sale  specifying 
immediate  shipment.  The  broker,  in  confirming  the  sale  to  B,  his 
principal,  failed  to  advise  that  the  car  was  to  be  shipped  immediate , 
and  B  drew  on  Buyer  with  warehouse  receipt  attached  under  the 
belief  that  the  sale  was  ex  warehouse,  but  the  draft  was  refused  by 
Buyer,  who  took  the  position  that  immediate  shipping  period  having 
elapsed,  he  was  not  obligated  to  take  delivery  whatsoever  and  he 
therefore  gave  notice  of  cancellation  of  the  contract. 

Held,  That  from  all  the  facts  and  from  the  evidence  taken  it 
appears  that  the  broker  failed  to  notify  his  principal  of  the  actual 
conditions  of  the  sale,  and  as  the  principal  is  responsible  for  the  acts 
of  the  broker,  within  the  scope  of  his  authority,  and  as  the  Buyer 
acted  in  evident  good  faith,  he  cannot  be  made  to  suffer  for  mistakes 
or  omissions  of  the  Seller's  broker.  Therefore,  rejection  by  Buyer 
was  justified,  and  Seller  had  no  right  of  another  tender  after  the 
expiration  of  the  shipping  period,  in  this  instance  immediate  shipment, 
(Calif ornia  Bean  Dealers  Association  Arbitration  No.  19,  1918). 

Notice  to  Broker  Not  Notice  to  Buyer — A  sold  to  B  a  quantity 
of  Raisins  for  October-November  shipment.  Shipment  was  not  made 
in  either  month  or  subsequently.  Upon  submission  to  arbitration,  A 
claimed  that,  having  notified  his  broker  of  the  delay  in  shipment, 
he  was  entitled  to  an  extension  of  time  due  to  contingencies  arising 
as  a  result  of  the  war.  B  contended  that  A's  notice  to  A's  broker  could 
not  be  construed  as  notice  to  B  and  that  he  was  entitled  to  reimburse- 
ment for  non-delivery. 


34  COMMERCIAL  ARBITRATION 

Held,  That,  in  view  of  war  conditions  which  obtained,  A  was 
entitled  to  an  extension  of  time  beyond  the  last  shipping  period,  namely 
November  30th,  provided  proper  notice  of  inability  to  ship  had  been 
given  to  B.  No  such  notice  having  been  given,  we  cannot  accept  A's 
position  that  a  telegram  sent  to  his  agent  in  New  York  and  having  no 
reference  to  B's  unfilled  contract  was  notice  to  B.  In  view  of  out- 
standing promises  that  shipment  would  be  made  the  failure  to  give 
proper  notice  prior  to  the  expiry  date  of  the  shipping  period  was  a 
fatal  omission.  (Dried  Fruit  Association  of  California  Arbitration 
No.  128,  1918). 

Offer  of  Sale  Subject  to  "Prompt"  Answer  Not  Consummated 
by  One  Principal  Accepting  Through  Broker  by  "Night  Letter" 
Although  Reply  Was  Sent  in  Less  Than  Two  Hours  from  Re- 
ceipt of  Offer — A  San  Francisco  merchant  gave  a  Broker  a  firm  price 
on  800  bags  California  Japan  Rice  for  submission  to  a  named  pros- 
pective purchaser  at  Los  Angeles,  the  offer  being  subject  to  prompt 
reply.  The  Broker  sent  the  offer  to  the  Los  Angeles  prospect  by  fast 
message,  requesting  a  rush  answer  accepting  the  same.  The  offering 
telegram  was  received  by  the  Los  Angeles  house  at  3 :07  p.  m.  on  January 
27th  and  at  4  p.  m.  of  the  same  date  the  Los  Angeles  house  replied, 
by  night  letter,  accepting  the  offer.  On  January  28th  the  Broker  trans- 
mitted the  acceptance  to  the  Seller,  who  refused  to  confirm  the  business 
on  the  ground  that  prompt  reply  had  not  been  made,  and  also  that  he 
was  not  aware  that  the  offer  was  intended  for  any  specific  prospective 
purchaser  at  Los  Angeles.  The  Broker  insisted  that  the  identity  of  the 
Los  Angeles  principal  had  been  revealed  at  the  time  he  received  the  offer. 

Held,  That  the  quotation  given  the  Broker  was  meant  for  this 
specific  Buyer,  and  the  Broker  was  within  his  rights  in  assuming  that 
the  quotation  was  firm  subject  to  a  prompt  reply,  which  reply,  according 
to  the  evidence,  was  given  03^  the  Los  Angeles  principal  within  less  than 
two  hours  after  receipt  of  the  message  and  the  business  should  have 
been  confirmed  by  the  Seller.  (Rice  Association  of  California  Arbitra- 
tion No.  8,   1921). 

Award  Reversed  on  Appeal — The  Seller  appealed  from  the 
foregoing  award,  on  the  ground  that  the  arbitrators  had  erred  in  holding 
that  a  night  letter  complied  with  the  requirement  of  prompt  reply  to  a 
firm  offer  of  sale.    The  Arbitrators  on  Appeal  said: 

"That  the  offer  by  Seller  having  been  given  to  the  Broker  for 
transmission  to  a  specific  prospective  Buyer  and  the  Buyer  being  named, 
shall  be  considered  as  a  firm  offer  for  a  prompt  acceptance.  The  evidence 
showed  that  the  Broker  telegraphed  the  offer  to  his  principal  in  Los 


REPORTS  35 

Angeles  by  day  letter  that  same  day  and  requested  him  to  rush  answer 
accepting  Seller's  lot.  Buyer,  who  received  this  telegram  about  3:07 
p.  m.  that  day,  January  27th,  replied  by  wire  about  4  p.  m.  January 
27th,  authorizing  the  Broker  to  purchase  the  800  bags  in  question, 
but  instead  of  rushing  reply  by  fast  message  he  sent  it  by  night  letter 
and  he  should  have  known  that  the  result  would  be  that  the  reply 
could  not  be  received  by  the  Broker  until  the  following  morning;  in 
fact  the  confirmation  copy  of  the  telegraphic  reply  was  received  by 
the  Broker  by  mail  that  same  morning,  shortly  after  the  night  letter 
arrived. 

"The  (original)  Arbitration  Committee  in  its  decision  states: 
'Therefore,  the  Broker  was  within  his  rights  in  assuming  that  this 
quotation  was  firm  subject  to  a  prompt  reply,  which  reply,  as  per 
evidence,  was  given  by  Buyer,  Los  Angeles,  within  less  than  two  hours 
after  receipt  of  the  message  and  the  business  should  have  been  con- 
firmed by  Seller.' 

"As  stated  above,  we  agree  with  the  Arbitration  Committee  that 
'This  quotation  was  firm  subject  to  a  prompt  reply,'  but  the  reply  was 
by  night  letter  instead  of  a  fast  telegram  or  even  a  day  letter,  and  we 
decide  this  cannot  be  considered  a  prompt  reply  to  an  offer  made  under 
the  circumstances  in  this  case. 

"The  offer  was  made  in  the  morning  of  January  27th  to  be  wired  to  a 
Los  Angeles  Buyer  and  we  feel  that  a  prompt  reply  means  a  reply  by  fast 
message,  which  should  have  been  sent  by  Buyer  so  there  would  be  an 
assurance  that  his  Broker  would  receive  it  and  be  able  to  close  the 
transaction  that  same  day. 

"We  do  not  feel  that  the  Broker  was  at  fault  in  this  transaction. 
He  promptly  wired  the  offer  and  asked  his  principal  to  rush  answer. 
A  night  letter,  which  could  not  possibly  reach  the  Broker  until  the 
following  day,  cannot  be  considered  as  a  rush  answer  when  no  option 
until  the  following  day  was  given.  Had  Broker's  principal  in  Los 
Angeles  promptly  protected  him  by  a  rush  answer  as  requested  by  him, 
the  acceptance  would  have  constituted  a  contract. 

"We  reverse  the  decision  of  the  Arbitration  Committee  and  decide 
that  Seller  is  not  obligated  to  confirm  and  fill  the  order  as  submitted 
by  Broker."  (San  Francisco  Chamber  of  Commerce  Arbitration  on 
Appeal  from  the  Rice  Association  of  California,  1921). 


REPORTS  37 

Buyer's  Inspection  and  Acceptance 

The  term  "Subject  to  Buyer's  inspection  and  acceptance"  in  a 
contract  has  been  variously  interpreted,  but  the  majority  opinion  is 
that  it  is  virtually  an  option  on  the  goods  and  Buyer  is  the  sole  judge  of 
quality  of  goods  under  such  a  contract.  (Foreign  Commerce  Association 
Arbitration  No.  26,  1920,  Page  37). 

In  a  dissenting  opinion,  one  Arbitrator  held  that  phrases  similar 
to  that  under  discussion  customarily  are  considered  to  give  Buyer 
the  right  to  satisfy  himself  that  goods  tendered  are  of  contract  quality, 
and  not  simply  to  give  an  option  on  the  goods  until  after  Buyer  had 
inspected  them.  (Foreign  Commerce  Association  Arbitration  No.  26, 
Dissenting  Opinion,  Page  38). 

Where  a  contract  covering  Dried  Fruit  specifies  subject  to  inspection 
at  point  of  shipment,  the  Buyer  has  the  right  to  refuse  the  shipment  if, 
for  any  reason,  it  is  not  satisfactory  to  him.  (Dried  Fruit  Arbitration 
No.   172,  1914,  Page  39). 

Such  Clause  Becomes  Conditional  Sale — A  sold  B  a  quantity 
of  Walnut  Meats,  subject  to  "Buyer's  immediate  inspection  and 
acceptance."  Buyer  inspected  the  merchandise,  and  notified  Seller 
that  he  could  not  accept  same.  Seller  refused  to  accept  the  rejection, 
claiming  that  the  goods  were  as  designated  and  Buyer  was  obligated 
to  take  delivery. 

Held,  That  the  clause  Subject  to  Buyer's  immediate  inspection  and 
acceptance  makes  the  agreement  a  conditional  agreement  and  the 
acceptance  of  the  merchandise,  after  inspection,  is  a  condition  precedent 
to  the  consummation  of  the  purchase;  hence,  prior  to  acceptance  by 
Buyer,  said  agreement  merely  constitutes  an  option  in  favor  of  Buyer 
to  be  exercised  by  him  immediately.  The  whole  agreement  rests  upon 
and  is  subject  to  Buyer's  immediate  inspection  and  acceptance.  No 
one  is  authorized  to  accept  for  Buyer  as  the  purchase  is  made  subject 
to  Buyer's  acceptance  after  inspection;  therefore,  Buyer  is  the  sole 
judge  of  whether  the  merchandise  will  meet  his  requirements.  This 
being  the  case,  this  agreement  merely  constitutes  an  option  in  favor 
of  Buyer  to  be  exercised  by  him  immediately.  No  more  explicit  and 
unmistakable  language  than  that  employed  in  the  clause  ' 'Subject 
to  buyer's  immediate  inspection  and  acceptance,"  which  gives  the 
Buyer  the  sole  right  to  determine  for  himself  whether  the  merchandise 
was  satisfactory  to  him,  could  be  employed ;  and  this  language  must  be 
given  full  force  and  effect  in  any  fair  adjudication  of  the  difference 
between  the  parties  in  the  premises.   That  Buyer,  in  refusing  to  accept 


38  COMMERCIAL   ARBITRATION 

the  merchandise  as  he  did,  was  entirely  within  his  rights  as  set  forth  in 
the  preceding  paragraph.  (Foreign  Commerce  Association  Arbitration 
No.  26,  1920). 

While  the  award  was  signed  by  a  majority  of  the  Arbitrators,  and 
therefore  binding  upon  the  parties,  the  following  dissenting  opinion 
was  rendered  by  one  of  the  Arbitrators: 

Dissenting  Opinion — "The  undersigned  arbitrator  does  not 
agree  with  his  associates  in  the  foregoing  opinion  and  bases  his  dissension 
upon  the  following  statement  of  facts  and  his  conclusion  therefrom: 

Seller  put  Buyer  on  notice  that  the  lot  of  meats  contained  twenty 
cases  of  amber  quarters  and  Seller's  refusal  to  give  an  inspection  order 
until  Buyer  would  first  sign  a  memorandum  of  purchase  of  the  lot 
including  the  ambers  should  have  caused  Buyer,  if  he  was  in  any  doubt 
as  to  whether  he  was  closing  a  contract  or  taking  an  option,  to  have 
amended  the  clause  in  contract  regarding  inspection  to  read  subject 
to  Buyer's' confirmation  after  inspection  or  some  similar  phrase.  Buyer 
has  failed  to  clearly  express  in  contract  his  intention  that  under  the 
clause  subject  to  Buyer's  immediate  inspection  and  acceptance,  he  was 
merely  taking  an  option  on  the  goods;  on  the  other  hand  Seller  made  it 
very  plain,  by  insisting  that  quality  be  properly  described  and  all  other 
details  of  sale  covered  in  signing  memorandum  of  sale,  that  he  con- 
sidered the  deal  closed  provided  goods  were  found  to  be  in  accordance 
therewith.  Had  Seller  only  meant  to  give  an  option  subject  to  Buyer's 
approval  of  quality  he  would  not  have  cared  particularly  about  the 
language  of  the  clause  describing  the  quality  of  the  meats,  nor  would 
the  Buyer's  signature  have  been  necessary  or  demanded. 

"Phrases  similar  to  that  inserted  in  this  contract,  i.  e.  Subject  to 
Buyer's  immediate  inspection  and  acceptance  customarily  are  construed 
to  give  Buyer  the  right  to  satisfy  himself  that  goods  tendered  are  of 
contract  quality,  and  not  simply  to  give  an  option  on  the  goods  until 
after  Buyer  has  inspected  them;  if  confirmations  of  sale  similarly 
worded  are  to  be  held  as  mere  options,  the  integrity  of  trade  relations 
will  be  seriously  impaired  and  the  important  element  of  good  faith 
in  buying  and  selling  transactions  undermined  to  the  serious  injury  of 
reputable  concerns. 

"Commercially,  Buyer  practically  fulfilled  that  part  of  the  clause 
calling  for  his  "acceptance  "when,  by  signing  the  contract,  he  "accepted" 
all  of  its  terms  and  conditions,  including  the  description  of  the  quality 
of  the  meats,  and  thereafter  the  only  remaining  matter  to  be  determined 
was  whether  the  meats  were  of  the  described  quality. 

"I  feel  that  Buyer's  rejection  was  not  justified  and  that  he  should 
take  delivery  of  the  meats  and  pay  for  same  in  accordance  with  broker's 


REPORTS  39 

memorandum  of  sale,  plus  carrying  charges."      (Foreign  Commerce 
Association  Arbitration  No.  26,  1920). 

Under  Term  "Subject  to  Inspection"  Buyer  Has  Absolute 
Right  of  Rejection — Privilege  Not  Limited — Importance  of 
Obtaining  Signed  Contract — A  sold  to  B  a  quantity  of  Dried 
Fruit  under  the  Uniform  Dried  Fruit  contract,  containing  the  following 
qualifying  clause:   Subject  to  inspection  at  point  of  shipment. 

Buyer  made  the  inspection  and  rejected  the  goods.  Seller  claimed 
that  by  reason  of  Buyer's  rejection  he  sustained  a  loss  because  the 
goods  were  resold  at  a  price  lower  than  that  provided  in  the  contract, 
and  demanded  reimbursement  for  the  loss. 

Held,  That  the  clause  subject  to  inspection  at  point  of  shipment 
gave  Buyer  the  right  to  refuse  the  shipment  if  for  any  reason  it  was  not 
satisfactory  to  him,  as  the  privilege  of  inspection  is  not  limited  in  any 
way.  If  the  clause  had  read  subject  to  inspection  as  to  quality  or  subject 
to  approval  of  quality,  then  the  question  of  quality  would  have  been 
one  of  arbitration;  but  as  the  contract  simply  calls  for  goods  subject 
to  Buyer's  inspection,  and  Buyer  declined  to  accept  after  inspection, 
we  do  not  see  how  he  can  be  held  for  the  loss  sustained  by  the  Seller. 
A  sale  with  this  qualification  is  simply  an  option — nothing  more — 
and  in  refusing  to  accept  Buyer  is  within  his  rights.  Had  this  sale 
been  made  without  this  clause,  or  subject  to  approval  of  quality,  Buyer 
would  have  been  obliged,  under  the  "separable  lot"  clause  of  the  con- 
tract, to  have  taken  all  of  the  goods  at  the  contract  price  other  than  a 
portion  which  Buyer  claimed  to  have  been  faced,  and  these  would 
have  been  subject  to  arbitration  on  samples  and  if  found  to  be  improperly 
faced,  proper  damages  would  be  assessed  by  the  arbitrators.  We  call 
Seller's  attention  to  the  fact  that  while  he  signed  a  contract  and  for- 
warded same  to  Buyer  he  did  not  secure  a  signed  contract  in  return 
from  Buyer,  and  while  in  this  case  it  is  immaterial,  the  matter  having 
been  mutually  submitted  for  arbitration,  a  contract  should  be  insisted 
upon  at  all  times;  otherwise  it  might,  in  the  opinion  of  arbitrators, 
become  an  important  factor  in  the  presentation  of  any  case.  (Dried 
Fruit  Association  of  California  Arbitration  No.  172,  1914). 


REPORTS  41 


Certificate  of  Quality 


Under  contracts  calling  for  certificate  of  quality  to  be  final,  in- 
spection and  certificate  of  Chamber  of  Commerce  at  Port  of  Entry, 
showing  goods  to  be  F.  A.  Q.  of  the  season  or  of  the  grade  described  in- 
variably will  be  upheld,  unless  error  of  inspection  be  clearly  shown. 

Any  unauthorized  alteration  of  a  certificate  of  quality  will  not  be 
countenanced  by  arbitrators.  (Foreign  Commerce  Association  Arbitra- 
tion No.  25,  1920,  Page  52). 

Where  contract  calls  for  certificate  of  quality  by  Chamber  of  Com- 
merce at  Port  of  Entry  a  certificate  issued  by  any  other  commercial 
organization  is  not  a  good  tender.  (Foreign  Commerce  Association 
Arbitration  No.  25,  1920,  Page  52). 

Where  a  contract  specifies  "Chamber  of  Commerce  certificate 
final",  the  assertion  of  Buyer,  who  seeks  to  reject,  that  the  goods 
tendered  had  not  been  properly  segregated  at  time  of  official  inspection, 
will  not  avail  in  the  face  of  the  certificate  itself.  (Foreign  Commerce 
Association  Arbitration  No.  26,  1920,  Page  50). 

Nor  will  the  statement  of  the  Chief  Inspector  of  the  San  Francisco 
Chamber  of  Commerce  that  there  had  been  no  segregation  as  to  2,000 
bags  of  beans  ex  a  lot  of  6,000  bags  at  the  time  of  inspection  invalidate 
the  certificate  itself.  (Foreign  Commerce  Association  Arbitration 
No.  26,  1920,  on  Review,  Page  50). 

Under  a  C.  I.  F.  contract  covering  Prunes,  certificate  of  inspection 
of  the  goods  issued  at  time  of  shipment  is  final  under  the  so-called 
Water  Contract  of  the  Dried  Fruit  Association  of  California  and  a 
certificate  of  inspection  made  by  private  inspectors  at  destination  will 
not  avail  before  arbitrators.  (Dried  Fruit  Association  Arbitration 
No.   1,   1921,  Page  47). 

A  certificate  of  inspection  covering  Beans  sold  under  the  so-called 
Water  Contract  (1919)  of  the  California  Bean  Dealers  Association 
must  be  made  at  the  point  of  shipment,  i.  e.  the  dock  at  San  Francisco, 
and  not  at  an  interior  rail  shipment  point.  (California  Bean  Dealers 
Association  Arbitration  No.  26,  1922,  Page  45). 

When  a  contract  specifies  certificate  of  quality  final,  and  the  parties 
mutually  waive  the  finality  of  certificate,  arbitrators  will  go  beyond 
the  certificate  itself  and  pass  upon  the  quality  of  Beans.  (Foreign 
Commerce  Association  Arbitration  No.  26,  1920,  Page  42,  and  Arbitra- 
tion No.  34,  1921,  Page  43). 


42  COMMERCIAL   ARBITRATION 

Where  the  original  importer  stands  upon  the  contract  stipulation 
certificate  of  quality  final  arbitrators  will  not  go  beyond  the  certificate 
in  determining  the  quality,  notwithstanding  that  other  parties  have 
waived  the  stipulation  as  to  the  certificate  in  other  arbitrations  involving 
the  same  lot  of  Beans.  (Foreign  Commerce  Association  No.  40,  1921, 
Page  44). 

When  a  contract  covering  Rice  is  C.  I.  F.  in  terms,  and  foreign 
certificate  of  quality  shows  that  the  rice  was  in  sound  condition  at- 
tune of  shipment  and  F.  A.  Q.  of  the  season,  Buyer  will  not  be  sustained 
in  maintaining  that  it  must  have  been  in  unsound  condition  at  time  of 
shipment  in  face  of  the  certificate  of  inspection.  (San  Francisco  Chamber 
of  Commerce  Arbitration,  1915,  Page  70). 

Where  Parties  Waive  Finality  of  Certificate,  Arbitrators 
Will  Consider  Quality — Where  Sales  Are  Interrelated  and  Third 
Party  Involved — Seller,  in  Certain  Circumstances,  May  Become 
Agent  of  Buyer — His  Inspection  and  Acceptance — A,  a  merchant 
of  Chicago,  purchased  from  B,  a  San  Francisco  importer,  2,000  bags  of 
Chutenashi  Beans,  ex  dock  Seattle,  certificate  of  Seattle  Chamber 
of  Commerce  and  Commercial  Club  final  as  to  quality.  A,  in  turn, 
sold  1,400  bags  of  Chutenashi  Beans  to  C,  a  merchant  of  San  Francisco, 
and  C  had  sold  1,400  bags  of  the  same  merchandise  back  to  A.  The 
contracts  between  A  and  C  were  identical  with  that  between  A  and  B. 

When  the  beans  arrived  at  Seattle  B  notified  A,  who  instructed  B  to 
advise  C.  C  gave  A  shipping  instructions  to  ship  1,400  bags  to  A  in 
Chicago,  and  instructed  the  remainder  to  go  to  another  buyer.  C 
called  for  an  inspection  certificate  on  the  beans  and  was  furnished  with 
such  a  document,  grading  the  beans  as  C.  H.  P.  Chutenashi  Beans, 
Crop  of  1920,  F.  A.  Q.  of  the  season.  C  also  procured  a  sample  of  the 
beans  at  Seattle.  The  beans  were  shipped  by  B,  as  an  accommodation 
to  C,  to  A  at  Chicago.  When  the  beans  arrived  at  Chicago,  A  sought 
to  reject  them  on  the  ground  that  there  was  an  admixture  of  Kotenashi 
beans  with  the  Chutenashi  beans,  and  he  sought  to  hold  C  responsible. 
C  contended  that  the  transactions  were  interrelated  and  that  if  the 
beans  were  not  according  to  contract,  A  had  a  claim  against  B  and 
none  against  C,  since  the  identical  lot  was  tendered  to  C  by  B,  acting 
under  instructions  from  A.  However,  C  consented  to  drawing  of 
samples  at  Chicago  for  arbitration  at  San  Francisco,  and  this  was  done. 


REPORTS  43 

The  arbitrators  felt  called  upon  to  decide  one  question  only,  namely : 
Wcls  the  deliver]/  of  J, 400  bags  Chutenashi  beans  to  A  by  C  a  good  delivery 

under   the    contract! 

In  this  connection  the  arbitrators  said: 

"Notwithstanding  the  provision  of  the  contract  calling  for  Chamber 
of  COnimerce  certificate  final  as  to  quality,  the  arbitrators  are  of  the 
unanimous  opinion  that  they  are  not  confined  to  a  technical  considera- 
tion of  this  certificate  if  the  samples  submitted  for  arbitration  indicate 
that  there  was  any  error  in  the  shipment  which  would  affect  the  true 
character  of  the  delivery,  and  therefore  in  all  equity  they  made  a  careful 
examination  of  the  samples  submitted.  The  arbitrators  found  on 
examination  of  the  samples  that  a  small  percentage  of  the  shipment 
consists  of  Kotenashi  beans  contained  in  separate  bags  and  not  mixed 
with  the  Chutenashi  beans.  In  the  opinion  of  the  arbitrators  Kotenashi 
beans  were  loaded  into  the  car  in  error  but  the  error  was  not  due  to 
the  gross  carelessness  of  the  Seller,  who  in  good  faith  gave  loading 
instructions  of  a  specific  lot  of  Chutenashi  beans  with  certain  marks." 

The  arbitrators,  having  found  that  there  were  certain  bags  of 
Kotenashi  beans  in  the  shipment,  directed  A  to  have  the  beans  segre- 
gated, and  awarded  that  he  return  the  number  of  bags  of  Kotenashi 
beans  to  C,  and  directed  C  to  repay  A  for  same,  together  with  charges 
of  segregation.  This  was  done  in  due  course,  and  it  was  found  that 
there  were  71  bags  of  Kotenashi  beans  in  the  shipment.  The  amount 
claimed  by  A  against  C  was  $524.16,  representing  the  price  paid  for  the 
beans  and  the  costs  of  segregation  and  carrying  charges.  (Foreign 
Commerce  Association  Arbitration  No.   26,    1920). 

Claim  Arising  from  Same  Delivery,  Except  That  Buyer  Was 
the  Seller — Following  Arbitration  No.  26,  C  demanded  an  arbitration 
with  A,  claiming  the  identical  sum  from  A  for  the  same  reasons  advanced 
by  A  in  prosecuting  his  claim  against  C. 

The  arbitrators  said: 

"Both  contracts  of  re-sale  show  clearly  that  the  transactions  are 
re-sales  of  an  original  lot  to  be  imported  by  B,  and  the  transactions 
are  therefore  more  or  less  interdependent,  one  delivery  being  predicated 
upon  another.  There  has  not  been  sufficient  evidence  produced  to 
show  that  C  did  examine  the  entire  1,400  bags,  nor  proof  that  he 
had  any  knowledge  that  any  portion  thereof  were  a  different  variety 
of  beans,  namely  Kotenashi.  It  is  not  customary  when  inspecting  and 
sampling  beans  to  examine  every  bag,  and  the  arbitrators,  from  the 
facts  submitted,  believe  that  the  Kotenashis  were  loaded  on  to  the 


44  COMMERCIAL   ARBITRATION 

cars  without  the  knowledge  of  C  after  inspection,  either  b}'  a  mis- 
delivery on  the  part  of  the  dock  at  Seattle,  or,  if  the  marks  on  the  bags 
of  Kotenashis  were  identical  with  the  marks  on  the  bags  of  the  Chuten- 
ashis,  they  were  incorrectly  bagged  by  B's  supplier  in  the  Orient.  No 
evidence  was  submitted  as  to  the  marks  on  the  bags. 

"Not withstanding  the  provision  of  the  contract  calling  for  Chamber 
of  Commerce  certificate  being  final  as  to  quality,  there  is  proof  of  error 
in  shipment  affecting  the  true  character  of  the  delivery,  and  arbitrators 
feel  that  they  are,  therefore,  not  confined  to  a  technical  consideration 
of  the  coast  inspection.  It  is  not  a  question  of  a  slight  variation  in 
quality  of  a  given  variety  of  beans,  but  of  a  palpable  error  in  forwarding 
the  wrong  kind  of  beans. 

"Arbitrators  are  of  the  opinion  that  an  error  having  been  made 
in  the  shipment,  the  only  way  in  which  C  can  recover  is  to  look  to  his 
suppliers  A,  C  having  no  contractual  connection  with  B  in  this  trans- 
action." 

The  arbitrators  then  awarded  C  $524.16  to  be  paid  by  A,  the  identical 
sum  awarded  in  Arbitration  No.  26  (reported  in  the  foregoing)  against  C. 
(Foreign  Commerce  Association  Arbitration  34,   1921). 

Original  Buyer  Seeking  Redress  from  Oriental  Supplier — 
Where  Certificate  as  to  Quality  Final — Inspection  by  Agent, 
Himself  a  Buyer — A  then  sought  to  recover  the  sum  of  $524.16  from 

B,  the  original  supplier.  A  submitted  the  two  previous  arbitrations, 
Foreign  Commerce  Association  Arbitrations  Nos.  26  and  34,  respectively, 
in  evidence,  claiming  his  damage  thereunder. 

The  arbitrators  said: 

"The  beans  were  sold  by  B  to  A  under  a  contract  providing  for 
Chamber  of  Commerce  certificate  to  be  final.  Such  certificate  was 
furnished  by  the  Seller  to  the  Buyer.  In  the  arbitration  dated  December 
21,  1920,  between  A  and  B,  the  parties  thereto  agreed  to  submit  the 
question  of  quality  and  did  accept  samples  drawn  by  public  sampler 
at  Chicago,  upon  which  the  arbitration  was  to  be  based.  Thereby  they 
waived  the  provision  in  the  contract  providing  for  Chamber  of  Com- 
merce certificate  to  be  final. 

"In  the  present  case,  however,  the  Seller  at  no  time  has  waived 
his  rights  under  the  contract,  and  in  the  opinion  of  the  arbitrators  they 
cannot  go  beyond  the  express  limitations  of  the  written  contract. 
The  arbitrations  between  A  and  C  relate  to  the  sale  and  resale  of  the 
identical  lot  of  beans.  When  A  was  asked  for  shipping  instructions 
by  B,  under  the  terms  of  another  contract,  A  instructed  delivery  to  C. 

C,  according  to  the  record,  not  only  received  a  Chamber  of  Commerce 
certificate  at  Seattle  from  B,  but  also  was  afforded  the  opportunity  to 


REPORTS  45 

and  did  examine  the  goods  prior  to  shipment.  The  goods  were  then 
shipped,  at  the  request  of  C,  to  A  by  B,  who  acted  as  an  accommodation 
to  C. 

"After  the  most  careful  consideration  of  the  entire  record  the 
arbitrators  are  of  the  unanimous  opinion  that  B,  having  obtained  the 
disinterested  certificate  of  the  Seattle  Chamber  of  Commerce,  and 
having  given  C,  acting  as  agent  for  A,  the  opportunity  to  inspect  the 
goods,  and  C  having  so  inspected,  B  fully  complied  with  every  feature 
of  this  contract. 

"In  the  unanimous  opinion  of  the  arbitrators  A  cannot  now  claim 
an  allowance  or  reimbursement  from  B  for  the  acts  of  his  agent,  namely: 
C,  who  inspected  and  accepted  the  goods  at  Seattle.  This  was  an 
F.  O.  B.  cars,  Pacific  Coast,  sale  and  was  not  delivered  at  Chicago. 
Every  document  submitted  by  B  classifies  these  beans  as  Chutenashi 
beans,  and  the  sale  having  been  predicated  upon  a  Chamber  of  Com- 
merce certificate  as  to  quality,  the  arbitrators  are  in  duty  bound  not 
to  go  beyond  such  certificate  unless  there  be  a  clear  showing  of  fraud  or 
collusion  in  the  shipment  of  these  beans. 

"The  arbitrators  realize  that  in  making  this  decision  they  are 
seemingly  taking  a  different  attitude  than  that  taken  by  other  arbi- 
trators in  this  Association  in  the  matters  submitted  between  A  and  C. 
But  there  is  this  essential  difference  between  this  arbitration  and 
the  others,  namely:  C  and  A  impliedly  waived  the  finality  of  the 
Chamber  of  Commerce  certificate  when  they  submitted  the  question 
of  quality  to  the  arbitrators,  and  the  arbitrators  in  the  other  cases  were 
bound  to  make  an  award  within  the  terms  of  the  submission." 

Held,  That  the  claim  of  A  against  B  is  disallowed  with  costs  to  A. 
(Foreign  Commerce  Association  Arbitration  No.  40,   1921). 

Sufficiency  of  Inspection  Certificate  on  Beans  Sold  Under 
Water  Shipment  Contract — Inspection  at  Interior  Point  Does 
Not  Cover  Goods  at  Time  of  Shipment — Deterioration  in  Transit 

— A  California  shipper  sold  a  car  of  California  Mexican  Red  Beans 
to  a  New  York  merchant,  F.  O.  B.  dock,  San  Francisco,  for  shipment 
by  steamer,  under  the  Uniform  California  Bean  Contract  for  water 
shipment  (1919). 

The  beans  arrived  at  New  York  ex  S.  S.  "Edgar  Luckenbach" 
on  December  2,  1921,  and  Buyer,  who  had  already  paid  for  them, 
immediately  rejected  on  the  ground  that  the  beans  were  infested 
with  live  weevil.  Samples  were  drawn  and  sent  to  the  California  Bean 
Dealers'  Association,  at  San  Francisco,  for  the  purpose  of  arbitration. 


46  COMMERCIAL   ARBITRATION 

The  Seller  claimed  that  the  car  had  been  shipped  from  Turlock 
October  29,  1921,  in  S.  P.  Car  No.  89325,  and  that  the  identical  car 
load  was  delivered  to  the  vessel  and  bill  of  lading  issued  therefor 
on  November  4,  1921.  The  Seller  maintained  that  the  car  had  been 
officially  inspected  and  a  certificate  thereon  issued  by  the  Chief  In- 
spector, Grain  Trade  Association  of  the  San  Francisco  Chamber  of 
Commerce,  and  produced  Certificate  No.  45836,  showing  that  the 
identical  lot  shipped  per  the  S.  S.  "Edgar  Luckenbach"  was  sampled 
at  Turlock  and  graded  as  Choice  Recleaned,  Crop  of  1921,  "in  sound 
condition  at  date  of  inspection — October  29,  1921."  The  Seller,  how- 
ever, had  not  sent  this  certificate  to  the  Buyer  with  other  documents, 
and  it  was  not  until  after  the  goods  arrived  at  New  York  and  the  Buyer 
had  taken  exception  to  the  quality  that  the  Seller  forwarded  the 
certificate. 

The  Uniform  California  Bean  Contract  for  Water  and  Rail-water 
Shipment  (1919)  contains  this  clause: 

Buyer  hereby  expressly  assumes  all  risks  after  examination 
and  acceptance  by  Buyer's  representative  at  point  of  shipment 
and  furnishing  by  Seller  of  Public  Weigher's  Certificate.  Failure 
on  Buyer's  part  to  so  inspect  will  give  Seller  privilege  to 
have  inspection  made  by  Inspector  of  the  Chamber  of  Com- 
merce of  San  Francisco,  Los  Angeles,  or  San  Diego,  and  his 
certificate  of  quality  issued  therefor  shall  be  final  as  to 
quality.  If  inspection  as  above  provided  for  is  not  made, 
any  dispute  as  to  quality  shall  be  settled  by  arbitration  as 
hereinafter  provided. 

The  arbitrators  said: 

"Under  this  clause,  upon  failure  of  Buyer  to  have  the  beans  in- 
spected, the  Seller  had  the  privilege  of  having  inspection  made  by 
Inspector  of  the  Chamber  of  Commerce  of  San  Francisco  *  *  *  *  and 
his  certificate  of  quality  issued  therefor  shall  be  final  as  to  quality.  If 
inspection  as  above  provided  for  is  not  made,  any  dispute  as  to  quality 
shall  be  settled  by  arbitration. 

"The  goods  under  contract  were  sold  T.  O.  B.  dock  for  Steamer' 
and  not  F.  O.  B.  Cars  Common  Shipping  Point.  Therefore,  the  point  of 
inspection  under  the  contract  was  on  the  Dock  at  San  Francisco  and 
not  on  the  car  at  Turlock.  Having  failed  to  have  inspection  made 
on  the  dock  at  San  Francisco,  Seller  did  not  comply  with  the  inspection 
clause  in  the  contract.  Therefore,  the  inspection  certificate  covering 
the  beans  on  the  car  at  Turlock  is  not  a  valid  certificate  covering  beans 
on  the  dock  at  San  Francisco.   The  language  of  the  contract  is  explicit 


REPORTS  47 

and  its  intent  cannot  be  mistaken.  Furthermore,  trade  custom,  long 
since  established,  requires  inspections  for  water  shipments  to  be  made 
on  the  dock,  even  though  reinspection  is  necessary.  Had  the  certificate 
under  discussion  covered  the  beans  on  the  dock  at  San  Francisco  the 
contract  would  have  been  complied  with  by  the  Seller  as  to  quality, 
and  the  Buyer  would  not  be  entitled  to  arbitration  as  to  quality,  but  the 
certificate  would  be  final. 

"Since  the  inspection  was  not  made  by  the  San  Francisco  Chamber 
of  Commerce  on  the  dock,  as  provided  by  the  contract,  the  arbitrators 
decide  that  the  Seller  failed  to  comply  with  the  inspection  clause  of  the 
contract,  and  that  the  Buyer  is  entitled  to  a  determination  and  award 
on  the  question  of  quality. 

"The  Buyer,  in  his  submission  to  arbitration,  insists  that  weevil 
could  not  and  would  not  develop  in  new  crop  beans  within  the  time 
the  beans  were  en  route  to  New  York,  namely  26  days,  and  he  offered 
in  evidence  the  statement  of  a  committee  of  the  New  York  Dried  Fruit 
Association  to  the  same  effect.  In  this  both  the  Buyer  and  the  afore- 
mentioned committee  are  in  error,  for  it  has  been  established  beyond 
peradventure  of  doubt  that,  under  certain  conditions,  new  crop  beans 
have  developed  weevil  in  less  time  than  26  days,  and  there  is  no  known 
means  of  determining  how  quickly  weevil  may  develop  in  beans.  The 
arbitrators  are  of  the  opinion  that  the  beans  which  they  have  examined 
in  this  arbitration  may  have  developed  weevil  between  the  time  of 
loading  and  inspection  at  Turlock,  on  October  29th,  and  the  shipment 
on  the  steamer  at  San  Francisco,  November  4th.  Had  the  beans  been 
reinspected  on  the  dock  at  San  Francisco,  their  exact  condition  at  that 
time  would  have  been  ascertained  and  established." 

Held,  That  the  Seller,  not  having  complied  with  the  inspection 
clause  in  the  contract,  and  the  beans  having  arrived  at  destination  in  a 
weevily  condition,  rejection  by  Buyer  is  sustained,  and  Seller  shall 
refund  the  purchase  price  together  with  carrying  charges.  (California 
Bean  Dealers  Association  Arbitration  No.  26,  1922). 

Certificate  of  Quality  of  Dried  Fruit  at  Time  of  Shipment  by 
Water  is  Final — Inspection  Terms  of  So-called  Water  Contract 
Fully  Interpreted — Claim  for  Deterioration  in  Transit  Dis- 
allowed— A  California  packer  sold  to  a  merchant  in  Bergen,  Norway, 
a  quantity  of  Prunes,  F.  O.  B.  California,  priced  C.  I.  F.  Bergen. 
Shipment  was  made  by  steamer  in  May,  1920,  and  upon  arrival  of  the 
goods  at  destination  Buyer  objected  to  the  quality,  claiming  that  as 
the  goods  did  not  arrive  in  good  condition  they  were  not  sound  at  time 


48  COMMERCIAL   ARBITRATION 

of  shipment,  and  asked  to  be  reimbursed  for  the  difference  between  the 
invoice  price  and  the  appraised  value  at  port  of  destination. 

The  contract  was  dated  July  15,  1919,  and  specified  goods  of  the 
season  of  1919,  to  be  shipped  during  December,  1919.  By  the  terms  of 
the  contract  the  Buyer  agreed  to  open  a  letter  of  credit,  which  was  not 
done  prior  to  December  and  not  until  May,  1920.  The  contract  pro- 
vided that  if  for  any  reason  shipment  be  impossible,  the  credit  should 
be  available  against  warehouse  receipt  on  January  1,  1920.  Upon 
issuance  of  the  letter  of  credit,  the  goods  were  shipped  from  the  interior 
of  California  and  arrived  on  the  dock  for  steamer  May  12,  1920,  when 
Seller  had  them  inspected  by  the  Dried  Fruit  Association  of  California 
and  a  certificate  issued  May  21,  1920,  showing  the  goods  to  be  "of  good 
quality,  condition,  count  and  of  the  grade  and  character"  required  by 
the  contract.  The  goods  were  shipped  per  M/S  "San  Francisco"  and 
were  approximately  three  months  in  transit. 

Buyer  immediately  objected  to  the  quality,  and  caused  two  in- 
spectors to  examine  same  at  the  request  of  the  Town  Justitiarius  of 
Bergen.  These  inspectors  issued  a  certificate  to  the  effect  that  467  of 
1,000  boxes  were  of  "sound  and  properly  handled  quality,"  but  that  the 
remainder,  533  boxes,  were  not,  and  the  inspectors  made  a  certain 
appraised  value  on  this  remainder.  The  inspectors  at  Bergen  also  made 
the  following  comment: 

We  may  add  that  a  certificate  ought  not  to  have  been  issued 
by  the  American  inspectors  for  the  above  533  boxes. 
On  the  basis  of  the  Bergen  inspection  and  appraisal,  the  Buyer 
made  claim  for  $1,638.36.  The  Buyer  also  caused  samples  to  be  drawn 
and  sent  to  the  Chamber  of  Commerce  of  the  State  of  New  York  and  by 
that  body  transmitted  to  the  Dried  Fruit  Association  about  a  year 
after  having  been  drawn. 

The  Seller  maintained  that  the  certificate  of  inspection  of  the  Dried 
Fruit  Association  is  final  and  conclusive  upon  both  parties.  In  his 
argument  on  submission  the  Seller  stressed  the  finality  of  the  certificate, 
as  follows: 

"The  contract  provides  'a  quality  certificate  of  the  Dried 
Fruit  Association  of  California  showing  the  goods  to  be  in 
accordance  with  the  contract'  shall  be  furnished  'if  requested 
by  Buyer  at  time  of  sale  or  desired  by  Seller.'  If,  after 
examination,  the  certificate  is  refused,  there  shall  be  'im- 
mediate arbitration  *  *  *  before  the  Dried  Fruit  Asso- 
ciation at  San  Francisco  in  accordance  with  its  rules'  and  'the 
findings  of  the  Arbitration  Committee  shall  then  take  the 


REPORTS  49 

place  of  the  inspection  certificate  and  be  of  equal  force  and 
effect.'    The  provisions  of  the  contract  regarding  the  certificate 
of    inspection    are    meaningless    unless    the    certificate    had 
finality." 
The  Buyer  insisted  that  the  condition  of  the  prunes  on  arrival  was 
the  governing  factor,  and  that  the  provision  in  the  Uniform  Dried 
Fruit  Association's  contract   covering  water  shipments  involved  no 
obligation  on  the  part  of  the  purchaser  to  accept  such  certificate  as 
final,  and  in  fact  had  no  force  and  effect. 

Answering  this  point,  the  Seller  said  in  his  presentation: 

"A  written  contract  is  simply  an  instrument  in  which 
the  parties  seek  to  state  what  is  agreed  upon  between  them, 
and  the  vital  question  always  is  what  they  meant.  Agree- 
ments which  are  necessarily  implied  from  the  language  used  are 
just  as  effective  as  agreements  which  are  expressed  in  so  many 
words.  It  was  not  necessary,  in  order  to  make  the  inspection 
certificate  final,  that  the  parties  use  a  particular  formula, 
or  declare  in  so  many  words  that  it  should  be  final  as  to  grade, 
quality  and  condition.  If  the  contract  shows  that  they  under- 
stood and  intended  that  it  should  be  final,  it  is  as  effective 
to  that  end  as  though  they  had  said  so  in  so  many  words. 

"The  parties  contracted  in  view  of  the  trade  customs 
and  practices  which  had  obtained  for  years.  The  inspection 
certificates  of  this  Association  had  for  years  been  accepted 
as  final  by  the  parties  to  export  contracts,  and  read  in  the 
light  of  that  trade  practice,  the  meaning  of  the  contract  is 
beyond  question.  But  even  without  reference  to  that  par- 
ticular practice,  its  meaning  admits  of  no  doubt.  The  cer- 
tificate was,  by  the  terms  of  the  contract,  given  the  same 
force  and  effect  as  the  findings  of  an  arbitration  committee, 
and  this  can  mean  nothing  except  that  the  certificate  when 
issued  should  be  final." 

Held,  (1)  That  the  samples  of  prunes  submitted  by  Buyer  to 
substantiate  quality  cannot  be  taken  into  consideration,  as  it  is  not 
possible  at  this  late  date  to  determine  by  said  samples  the  condition 
or  quality  of  Prunes  when  shipped  from  San  Francisco  in  May,  1920, 
approximately  two  years  ago.  In  addition  to  the  lapse  of  time  must 
be  considered  the  unknown  treatment  the  fruit  has  received,  such  as 
storage,  climatic  conditions,  etc.,  while  in  transit  and  at  destination; 
(2)  that  Seller  furnished  a  certificate  of  quality  at  time  of  shipment, 
and  this  certificate  is  the  only  direct  evidence  before  the  arbitrators 


50  COMMERCIAL   ARBITRATION 

by  which  to  determine  the  quality  of  the  prunes  at  time  of  delivery  to 
steamship  company  at  San  Francisco.  This  certifies  that  the  prunes 
were  inspected  after  delivery  to  the  steamship  company  by  an  official 
inspector  of  the  Dried  Fruit  Association  of  California,  and  were  found 
by  him  to  be  of  the  crop  of  1919  and  of  fair  average  quality  of  the 
season,  in  good  condition  and  of  proper  count.  Therefore,  Seller  fully 
complied  with  all  the  terms  and  conditions  of  his  contract,  and  the 
claim  of  Buyer  is  disallowed.  (Dried  Fruit  Association  Arbitration 
No.  1,  1922). 

Where  Certificate  of  Quality  Is  Final  Mere  Statement  That 
Goods  Were  Not  Segregated  Will  Not  Suffice — A  sold  B  a  quantity 
of  Kotenashi  Beans,  Chamber  of  Commerce  Certificate  to  be  final 
as  to  quality.  Buyer  rejected  the  tender,  alleging  that  the  official 
inspection  certificate  did  not  truly  state  the  quality  of  the  beans  as  to 
moisture;  that  the  shipment  covered  by  the  contract  not  having  been 
segregated  from  a  shipment  of  6,000  bags  prior  to  inspection,  the 
inspection  certificate  could  only  be  based  upon  the  average  of  the  entire 
shipment  and  was  not  a  fair  determination  of  the  particular  goods; 
that  Seller  made  two  previous  tenders  of  goods  that  were  repudiated 
owing  to  the  fact  that  the  moisture  content  was  in  excess  of  16  per  cent; 
that  as  a  result  of  a  further  determination  made  by  the  Chamber  of 
Commerce  of  the  segregated  2,000  bags  the  moisture  content  was  found 
to  exceed  17  per  cent.  On  the  other  hand,  Seller  alleged  that  the 
contract  provided  that  Chamber  of  Commerce  certificate  shall  be 
final;  that  the  goods  were  properly  inspected  after  segregation,  a  clean 
certificate  issued  thereon  and  that  in  every  way  he  complied  with  the 
contract  requirements;  that  no  previous  formal  tenders  were  made 
and  that  there  was  no  ground  for  rejection,  either  in  fact  or  on  the  face 
of  the  documentary  evidence  presented. 

Held,  That  Seller  did  not  make  any  preliminary  formal  tenders 
prior  to  the  specific  tender  of  September  1st,  upon  which  the  case 
rests,  which  tender  was  in  full  accordance  with  the  contract  and  should 
have  been  accepted  by  the  Buyer.  In  view  of  the  Buyer's  statement 
as  to  the  irregularity  of  the  certificate,  the  arbitrators  have  obtained  a 
confirmation  from  the  Chief  Inspector,  San  Francisco  Chamber  of 
Commerce,  that  the  particular  2,000  sacks  comprising  this  shipment 
were  segregated  prior  to  inspection  and  the  issuance  of  the  certificate, 
and  that  the  certificate  was  based  only  upon  the  specific  goods  in 
question.  That  in  his  letter  of  August  26th  Seller  did  not  indicate, 
as  claimed  by  Buyer,  that  it  would  be  impossible  for  him  to  deliver 
within  the  specified  time.  He  merely  asked  the  Buyer  if  an  extension 
of  time  would  be  agreeable  to  him.    There  was  nothing  in  this  letter 


REPORTS  51 

that  in  any  way  justified  the  Buyer's  covering  elsewhere  and  if  he  did 
so.  he  did  so  at  his  own  risk  and  for  his  own  account.  If  the  previous 
tenders  alleged  by  the  Buyer  had  been  made,  any  criticism  or  con- 
tention in  connection  therewith  was  waived  by  his  own  admitted 
extensions  and  consent  to  additional  tenders.  The  arbitrators  do  not 
consider  that  the  second  certificate  obtained  by  the  Buyer  has  any 
bearing  on  or  is  relevant  to  this  issue  for  the  reason  that  the  original 
certificate  covered  all  the  contract  requirements  and  was,  therefore, 
final. 

The  arbitrators  also  desire  to  go  on  record  as  vigorously  condemning 
the  inclusion  in  the  record  by  either  party  to  an  arbitration  of  any 
insinuations  or  assertions  reflecting  upon  the  motives  actuating  the 
other  party.  Such  matter  has  no  place  in  proceedings  of  this  character. 
(Foreign  Commerce  Association  Arbitration  No.  26,  1920). 

Immediately  upon  issuance  of  Finding  and  Award  in  the  foregoing, 
Buyer,  supporting  his  allegation  with  a  signed  statement  from  the 
Chief  Inspector  of  the  Grain  Trade  Association  of  the  San  Francisco 
Chamber  of  Commerce  to  the  effect  that  there  had  been  no  segregation 
of  the  lot  of  beans  marked  "TYC"  at  the  time  samples  were  drawn  and 
examination  made  as  covered  by  Certificate  No.  38888,  requested  a 
reconsideration  and  reversal  of  the  decision  of  the  arbitrators. 

On  this  proposition,  the  arbitrators  said: 

"Careful  consideration  has  been  given  the  entire  subject  matter. 
The  facts  are  that  the  contract  called  for  'Chamber  of  Commerce 
certificate  final.'  Seller,  in  good  faith,  tendered  such  document,  he,  as 
well  as  others,  having  accepted  same  at  its  face  value.  It  was  the  only 
document  available  at  the  time  and,  so  far  as  the  record  shows,  was 
entirely  regular  and  is  to  this  day  in  full  force  and  effect,  never  having 
been  recalled.  By  tendering  such  document  Seller  fully  met  his  contract 
requirements."  (Foreign  Commerce  Association  Arbitration  No.  26, 
1920). 

The  statement  of  the  Chief  Inspector  contained  the  following: 

"The  Certificate  No.  38888,  dated  August  24th,  was  issued 

upon  samples  which  had   been  taken  upon  arrival  of  steamer 

when  several   lots  of  the  mark  'TYC  had  been  discharged  on 

the  dock  and  before  any  particular  lot  of  2,000  bags  had  been 

segregated,  except  as  they  lay  on  the  dock  ex  ship's  tackles." 

In  upholding  the  certificate  as  issued  the  arbitrators  said: 

'It    will    be   noted    that    there    is    no    claim    therein    (the    Chief 

Inspector's  statement)  that  Certificate  No.  38888  was  and  is  invalid 

or  that  the  beans  inspected  may  not  have  been  or  were  not  in  whole 


52  COMMERCIAL   ARBITRATION 

or  in  part  the  identical  lot.  Trade  of  the  port  largely  is  based  upon  the 
certificates  issued  by  the  Chamber  of  Commerce,  and  in  the  absence 
of  fraud  or  collusion,  such  certificates  are  accepted  at  their  face  value, 
especially  when  contracts  are  predicated  upon  the  finality  of  such 
certificates.  In  this  cause  there  is  no  question  of  fraud  or  collusion, 
and  at  the  same  time  Buyer  and  Seller  have  acted  in  entire  good  faith. 
Apart  from  technicalities  set  up  in  this  case  equity  favors  the  Seller. 
Therefore,  the  arbitrators,  after  the  fullest  consideration,  confirm  their 
findings  of  September  22,  1920."  (Foreign  Commerce  Association 
Arbitration  No.  26,  1920). 

When  Contract  Specifies  Certificate  of  Chamber  of  Com- 
merce at  Port  of  Entry,  Certificate  Issued  by  Another  Organiza- 
tion Not  Sufficient — Alteration  of  Certificate — A  sold  to  B  100  tons 
Korean  Kotenashi  beans,  1919  Crop,  C.  H.  P.  F.  A.  Q.  of  the  season, 
certificate  of  Chamber  of  Commerce  at  port  of  entry  as  to  quality  and 
season  to  be  final.  The  Buyer  claimed  the  right  to  reject  on  account 
of  the  failure  of  Seller  to  furnish  a  certificate  of  the  Seattle  Chamber  of 
Commerce  and  Commercial  Club,  Seattle  being  the  port  of  entry. 
Instead  of  such  certificate  the  Seller  furnished  a  certificate  of  the 
Foreign  Commerce  Association  of  the  Pacific  Coast. 

The  record  showed  that  on  July  23rd  Seller  asked  for  shipping 
instructions  and  Buyer  requested  examination,  which  was  refused, 
Seller  claiming  that  Chamber  of  Commerce  certificate  was  to  be  final, 
and  that  the  same  would  be  furnished  with  documents  in  accordance 
with  the  terms  of  the  contract.  Under  date  July  27th  Buyer  gave 
shipping  instructions  directing  the  shipment  of  three  cars  to  Boston. 
Under  date  August  13th,  Seller  presented  his  invoice  with  attached 
weight  certificates  and  bills  of  lading  but  without  the  requisite  certificate 
of  quality.  Subsequently  Seller  presented  Seattle  Chamber  of  Com- 
merce certificates  Nos.  13663  and  13664  which  classified  the  beans  as 
Handpicked  Kotenashi  Beans  (Korean  Type)  F.  A.  Q.  1919  Crop. 
Buyer  took  exception  to  term  Korean  Type.  Under  date  August  25th 
Seller  presented  the  same  certificates  which  had  been  altered,  the  words 
Korean  Type  being  scratched  out  and  the  words  Choice  Handpicked 
Korean  inserted.  In  this  connection  the  record  shows  that  Seller  was 
not  the  original  supplier  and  that  the  certificates  in  question  were 
obtained  by  this  Seller  from  the  original  supplier  and  this  Seller  in  no 
way  was  responsible  for  the  alteration  of  this  certificate.  Buyer 
refused  to  accept  this  certificate  and  at  the  same  time  cancelled  the 
original  shipping  instructions  and  insisted  upon  diversion  to  Albion, 
New  York.  The  cars  in  question  could  not  be  diverted  at  Albion,  having 


REPORTS  53 

passed  that  point,  and  duly  arrived  in  Boston.  Buyer  also  contended 
that  by  reason  of  the  insufficiency  of  documents  furnished  by  the  Seller 
he  was  compelled  to  substitute  other  cars  against  his  contracts. 

Held,  That  it  is  a  well  settled  principle  that  on  F.  O.  B.  sales  the 
right  of  one  diversion  is  presupposed,  but  if  Buyer  delays  his  request 
for  such  diversion  beyond  the  time  when  it  may  be  attempted  or 
effected  by  Seller  using  due  diligence,  Seller  cannot  be  expected  to 
perform  the  impossible.  Seller  did  not  conform  to  his  contract  requiring 
a  certificate  of  quality  of  the  Seattle  Chamber  of  Commerce,  Seattle 
being  the  port  of  entry.  This  defect  was  not  cured  by  the  certificate 
of  the  Foreign  Commerce  Association,  which  was  not  provided  for  in 
the  contract.  In  the  opinion  of  the  arbitrators,  furthermore,  the 
original  importer  was  guilty  of  reprehensible  conduct  in  altering  an 
official  certificate  that  had  been  issued  by  the  Seattle  Chamber  of 
Commerce.  At  a  time  when  all  commercial  organizations  on  the 
Pacific  Coast  are  doing  their  utmost  to  insure  the  integrity  of  certificates 
of  inspection  this  record  stands  undisputed  that  the  original  importer 
is  guilty  of  extreme  bad  faith  bordering  on  deliberate  fraud. 

In  the  light  of  all  the  circumstances,  Buyer  is  not  entitled  to  an 
outright  rejection.  He  having  paid  for  the  goods  and  having  made 
claim  for  an  allowance,  the  arbitrators  are  of  the  opinion  that  Rule  13 
of  the  Foreign  Commerce  Association  of  the  Pacific  Coast  governs 
the  transaction,  and  he  is  therefore  granted  an  allowance  of  50  cents  a 
100  pounds  on  the  entire  shipment,  this  representing  the  difference 
between  the  sales  price  and  the  market  price  at  Boston,  where  the 
goods  were  sent  without  proper  covering  documents.  (Foreign  Com- 
merce Association  Arbitration  No.  25,  1920). 


REPORTS  55 

C.  I.  F.  and  C  &  F, 

Term  C.  I.  F.  Defined — The  term  C.  I.  F.  means  the  price  or 
cost  of  the  goods  and  charges  thereon  until  shipped,  the  premium  of 
insurance  on  the  goods,  and  the  cost  of  the  freight  thereon  from  point  of 
shipment  to  point  of  destination. 

Under  this  kind  of  a  contract  a  Seller  is  obligated : 

1.  To  furnish  goods  free  of  all  charges  and  incumbrances 
at  point  of  shipment. 

2.  To  arrange  the  usual  marine  insurance.  (This 
does  not  include  war  risk  insurance,  which  is  a 
separate  risk). 

3.  To  make  the  contract  of  affreightment  for  transporting 
the  goods  on  a  vessel  or  vessels  destined  from  the 
point  of  shipment  to  the  point  of  destination,  and 
pay  the  freight  charges  or  deduct  the  same  from 
the  invoice. 

4.  To  obtain  and  send  to  the  Buyer  clean  ocean  bills  of 
lading  or  through  rail  and  ocean  bills  of  lading. 

Under  a  C.  I.  F.  contract,  Seller  is  not  responsible,  after  issuance 
of  the  bill  of  lading,  for  any  loss  and/or  damage  and/or  deterioration 
and  or  contamination  of  goods  in  transit,  or  charges  of  whatsoever 
nature  incurred  after  shipment,  nor  for  non-arrival  of  all  or  a  portion 
of  the  goods  covered  by  the  contract. 

And  a  Buyer  is  obligated: 

1.  To  accept  and  pay  for  the  goods,  less  freight  charges 
if  freight  has  not  been  prepaid. 

2.  To  assume  all  risk  of  leakage  and/or  loss  and/or 
damage  and/or  contamination  and/or  deterioration  of 
goods  after  shipment  if  such  risk  is  not  covered  by 
insurance,  and  if  so  covered,  must  look  to  the  insurance 
company  or  carrier,  as  the  case  may  be,  for  adjust- 
ment and  payment  of  any  and  all  claims  howsoever 
arising  after  shipment  of  goods. 

3.  To  pay  all  customs  charges,  if  any,  at  destination 
of  shipment,  and  all  dock,  lighterage,  unloading  and/or 
charges  of  whatsoever  nature  after  shipment  of  goods. 

4.  To  pay  for  war  risk  insurance,  if  desired. 

Term  C.&F.  Defined — The  term  C.&F.  means  the  price  or  cost  of 
the  goods  and  charges  thereon  until  shipped,  and  the  cost  of  the  freight 


56  COMMERCIAL   ARBITRATION 

thereon  from  the  point  of  shipment  to  the  point  of  destination.  The 
duties  and  obligations  of  Seller  and  Buyer  are  the  same  as  under  C.  &  F. 
except  that  Seller  does  not  place  marine  insurance  upon  the  goods. 

Under  a  contract  specifying  C.  I.  F.  Havana,  Cuba,  rejection  of 
documents  covering  Rice  shipped  per  a  vessel  routed  via  Suez  Canal 
was  not  sustained  since  no  vessel  or  route  was  designated  in  the  contract. 
(Rice  Association  of  California  Arbitration  No.  9,  1920,  Page  99). 

Under  a  C.  I.  F.  Santiago,  Cuba,  contract,  delay  in  receipt  at  San 
Francisco  of  Oriental  shipping  documents  covering  Rice  will  not 
justify  rejection  by  Buyer,  especially  when  Seller  guarantees  Buyer 
against  expenses  that  might  be  incurred  at  port  of  destination  by 
reason  of  vessel  arriving  prior  to  receipt  and  tender  of  documents. 
(Rice  Association  of  California  Arbitration  No.  18,  1920,  Page  129). 

Where  contract  specifies  February-March  shipment,  C.  I.  F. 
Santiago,  Cuba,  Seller  is  under  no  obligation  to  notify  Buyer  that 
the  cargo  is  afloat  at  the  time  of  making  the  contract,  the  Seller  being 
obligated  only  to  make  shipment  within  the  specified  period.  (Rice 
Association  Arbitration  No.  18,  1920,  Page  129). 

A  typewritten  clause  in  an  insurance  policy,  furnished  under  a 
C.  I.  F.  sale,  which  conflicts  with  a  printed  clause,  controls  the  policy. 
(Rice  Association  of  California  Arbitration  No.  18,  1920,  Page  129). 

Where  Coconut  Oil  is  sold  under  a  qualified  C.  I.  F.  contract, 
i.  e.  a  contract  specifying  cost,  insurance  and  freight  from  point  of 
shipment  to  destination,  with  a  proviso  that  free  fatty  acids  content 
shall  be  determined  at  destination,  contamination  of  the  Coconut  Oil 
with  mineral  oil  after  shipment  is  a  risk  assumed  by  Buyer  under  the 
C.  I.  F.  stipulation.  (Foreign  Commerce  Association  Arbitration  No. 
36,  1921,  Page  59;  see  Dissenting  Opinion,  Page  61). 

A  typewritten  stipulation  in  a  contract  specifying  that  the  terms 
are  C.  I.  F.  controls  conflicting  ex  dock  provisions  which  are  printed 
therein,  it  being  the  rule  that  a  contract  cannot  be  both  C.  I.  F.  and 
ex  dock.  (Rice  Association  Arbitration  No.  14,  1920,  Page  58.  Affirmed 
on  Appeal  by  San  Francisco  Chamber  of  Commerce  Arbitration  on 
Appeal,   1920,  Page  59). 

When  there  is  doubt  as  to  whether  a  contract  is  C.  I.  F.  or  Ex  Dock 
and  the  parties  hold  divergent  views  as  to  the  intent,  arbitrators  will 
interpret  the  meaning  of  the  contract  according  to  the  preponderance 
of  evidence.  (San  Francisco  Chamber  of  Commerce  Arbitration,  1917, 
Page  73). 

Where  a  Buyer  desires  to  avoid  all  responsibility  for  Coconut 
Oil  from  time  of  shipment  at  foreign  port  until  arrival   at  American 


REPORTS  57 

port  of  entry  he  must  purchase  on  delivered  terms,  either  F.  O.  B.  cars, 
Pacific  Coast,  ex  dock  or  ex  ship.  (Foreign  Commerce  Association 
Arbitration  No.  37,  1921,  Page  63). 

Under  a  C.  I.  F.  contract  covering  Peanut  Oil  under  2  per  cent  free 
fatty  acids  as  per  Hong  Kong  government  Analyst's  Certificate,  a 
Buyer  is  not  entitled  to  a  determination  of  acidity  at  destination,  the 
acidity  at  point  of  shipment  being  the  controlling  factor.  (San  Fran- 
cisco Chamber  of  Commerce  Arbitration,  1919,  Page  64). 

Under  a  C.  I.  F.  contract  covering  Peanut  Oil,  loss  in  weight  is 
for  the  account  of  Buyer.  (San  Francisco  Chamber  of  Commerce 
Arbitration,  1919,  Page  64). 

When  a  C.  I.  F.  contract  gives  the  basis  of  the  freight  rate  and 
specifies  either  of  two  routes  and  gives  the  Buyer  the  option  of  selecting 
the  route,  any  additional  cost  to  be  on  Buyer's  account  or  any  saving 
to  be  for  his  benefit;  and  where  the  rate  of  freight  to  be  paid  by  Seller 
was  fixed  by  contract  and  the  rate  of  exchange  likewise  stipulated,  any 
additional  expense  on  account  of  freight  and  exchange  is  for  account 
of  Buyer.  (San  Francisco  Chamber  of  Commerce  Arbitration,  1919, 
Page  65). 

When  a  C.  I.  F.  contract  specifies  installment  payments,  and 
the  last  payment  is  to  be  upon  arrival  of  engines  at  San  Francisco,  and 
there  is  a  further  provision  that  Seller  is  not  to  be  held  liable  for  damages, 
or  for  loss  of  vessel  or  vessels,  or  for  all  or  part  lost  en  route  or  while  dis- 
charging, payment  of  the  last  installment  becomes  due  when  the  major 
portion  of  the  merchandise  reaches  destination  and  may  not  be  deferred 
until  the  arrival  of  all  of  the  cases,  four  of  which  were  delayed  by  reason 
of  transshipment.  (San  Francisco  Chamber  of  Commerce  Arbitration, 
1919,  Page  65). 

Under  a  C.  I.  F.  duty  paid  contract,  covering  Rice,  Seller  is  not 
responsible  for  wharfage  at  port  of  entry,  as  duty  may  be  paid  before 
goods  are  removed  from  the  wharf,  while  wharfage  need  not  be  paid 
until  such  goods  are  so  removed.  (San  Francisco  Chamber  of  Commerce 
Arbitration,  1915,  Page  70). 

When  a  C.  I.  F.  contract  is  predicated  upon  a  freight  rate  fixed 
therein  with  the  provision  that  any  increase  in  freight  shall  be  borne 
by  Buyer,  a  Seller  may  not  charge  any  increased  freight  without  proving 
that  there  was  an  actual  increase  in  the  rate  upon  which  the  contract 
was  based.  (San  Francisco  Chamber  of  Commerce  Arbitration,  1920, 
Page  71). 

Under  a  contract  specifying  C.  I.  F.  Bergen,  Norway,  covering 
Prunes,  Seller  is  not  responsible  for  deterioration  of  goods  after  ship- 


58  COMMERCIAL  ARBITRATION 

ment,  and  the  best  evidence  of  quality  at  time  of  shipment  is  certificate 
of  inspection  of  Dried  Fruit  Association  of  California.  (Dried  Fruit 
Association  Arbitration  No.  1,  1921,  Page  47). 

When  a  C.  I.  F.  contract  is  based  upon  a  specified  rate  for  war  risk 
insurance  any  increase  in  such  insurance  is  for  the  account  of  Buyer. 
(San  Francisco  Chamber  of  Commerce  Arbitration,  1919,  Page  65). 

A  C.  I.  F.  sale  has  absolutely  nothing  to  do  with  the  time  of  delivery 
of  the  goods;  it  merely  refers  to  the  time  of  shipment.  (San  Francisco 
Chamber  of  Commerce  Arbitration  on  Appeal,  1919,  Page  83). 

Under  a  C.  I.  F.  contract,  Seller  being  unable  to  ship  Rice  from 
Havana  to  Caibarien  in  bonded  rail  cars  or  to  obtain  steamer  space 
on  account  of  congestion  of  freight,  paid  the  duty  on  the  goods  for  his 
own  account  and  shipped  the  rice  by  rail  to  point  of  destination.  Buyer 
rejected  on  the  ground  that  the  payment  of  duty  by  Seller  under  a 
C.  I.  F.  contract  was  a  breach  of  contract.  The  rejection  was  not 
sustained,  arbitrators  pointing  out  that  Buyer  was  in  no  way  injured 
by  Seller  paying  duty.  (San  Francisco  Chamber  of  Commerce  Arbitra- 
tion, 1920,  Page  65). 

Typewritten  Stipulations  in  Contract  Abrogate  Printed 
Clauses — Contract  Cannot  Be  Both  C.  I.  F.  and  Ex  Dock — 
Damage  to  Cargo  Is  for  Buyer's  Account  Under  C.  I.  F.  Sale — 

A,  a  San  Francisco  importer,  sold  to  B  of  that  city,  250  tons  No.  1 
Siam  Usual  Rice,  June  shipment  from  Hongkong,  C.  I.  F.  San  Fran- 
cisco. B  sold  to  A  the  same  quantity  and  description  of  Rice  under 
identical  terms,  except  a  difference  in  price.  Upon  the  arrival  of  the 
Rice  at  San  Francisco,  no  documents  were  exchanged  by  the  parties, 
A,  whose  contract  with  B  showed  him  a  profit,  billing  B  for  the  amount 
of  his  profit  only.  B  subsequently  contended  that  671  bags  of  the  Rice 
were  damaged  and  made  claim  for  $2,855.77,  said  to  represent  the  dif- 
ference paid  for  the  Rice,  $13,978.27,  and  the  amount  which  B  obtained 
from  the  carrier  for  the  damage  to  the  Rice,  namely,  $11,272.34. 

B  based  his  claim  on  Clause  6  of  the  contract,  which  clause  was 
printed  as  follows: 

The  goods  being  for  buyer' s  account  andrisk  as  soon  as  landed. 
Vessel  lost,  contract  void;  goods  arriving  damaged  being  for  Seller's 
account,  but  will  constitute  a  portion  of  the  delivery. 

B  claimed  that  inasmuch  as  671  bags  arrived  damaged,  the  damaged 
portion  of  the  shipment  was  for  the  account  of  A.  On  the  other  hand, 
A  insisted  that  the  typewritten  portion  of  the  contract,  specifying  that 
the  sale  conditions  were  C.  I.  F.,  controlled  and  superseded  the  printed 


REPORTS  59 

Clause  6,  noted  above.  Such  being  the  case  any  damage  to  the  cargo 
en  route  was  for  B's  account. 

Held,  That  the  contract  in  question  is  a  C.  I.  F.  contract,  and 
consequently  any  damage  is  strictly  for  the  account  of  B.  Clause  6  of 
the  contract,  being  printed,  is  abrogated  by  the  typewritten  specifica- 
tions of  C.  I.  F.  Any  amount  uncollectible  from  the  carrier  on  account 
of  the  damaged  cargo  is  for  B's  account,  and  it  is  so  awarded.  (Rice 
Association  of  California  Arbitration  No.  14,  1920). 

Affirmed  on  Appeal — B  appealed  to  the  Arbitration  Committee 
of  the  San  Francisco  Chamber  of  Commerce,  alleging  error  on  the  part 
of  the  original  arbitrators.    The  Arbitrators  on  Appeal  said: 

"We  find  that  the  last  portion  of  Clause  6,  relating  to  damaged 
goods  and  referred  to  by  Buyer,  cannot  be  considered  alone  and  that  the 
entire  Clause  6  must  be  considered  in  this  case.  The  first  sentence, 
the  goods  being  for  Buyer's  account  and  risk  as  soon  as  landed  shows 
that  Clause  6,  if  it  stood  by  itself,  would  make  this  an  ex  dock  form  of 
contract.  The  typewritten  C.  I.  F.  clause,  written  in  subsequently, 
however,  is  distinctly  a  C.  I.  F.  form  of  contract.  The  dispute  in  question 
is  regarding  which  clause  governs. 

"It  is  clear  that  a  contract  cannot  be  both  C.  I.  F.  and  ex  dock  and 
the  question  is.  Which  contract  was  in  the  minds  of  the  parties  when 
they  signed?  If  the  parties  intended  this  to  be  an  ex  dock  contract, 
then  there  was  no  need  for  inserting  the  term  C.  I.  F.,  as  the  price 
made  would  have  been  ex  dock  instead  of  C.  I.  F.  Conversely,  if  they 
intended  it  to  be  a  C.  I.  F.  contract,  this  Clause  6  is  valueless  and 
without  force,  as  it  is  contradictory  to  the  well  known  meaning  of 
C.  I.  F.  and  the  obligations  of  Buyer  and  Seller  thereunder.  It  is  clear 
to  us  that  when  this  contract  was  made,  the  specific  writing-in  of  the 
condition  'C.  I.  F.'  shows  that  the  parties  had  in  mind  that  this  was 
to  be  a  C.  I.  F.  contract,  and  we  decide  that  the  written  specific  term 
C.  I.  F.  supersedes  the  entire  printed  ex  dock  Clause  6,  and  that  this 
is  a  C.  I.  F.  contract  and  the  damaged  portion  of  the  shipment  is,  there- 
fore, for  account  of  Buyer.  We  confirm  the  award  of  the  Arbitration 
Committee  of  the  Rice  Association  of  California  of  April  30,  1920. 
(San  Francisco  Chamber  of  Commerce  Arbitration  on  Appeal,  1920). 

Responsibility  for  Contamination  with  Mineral  Oil  of  Coco- 
nut Oil  Sold  Under  Qualified  C.  I.  F.  Contract— Buyer's  Risk 
After  Shipment  of  F.  A.   Q.  Grade — Interpretation  of  Clause 

— A  Manila,  P.  I.,  manufacturer  sold  a  quantity  of  "Manila  Crude 
Coconut  Oil,  fair  average  quality,  basis  5  per  cent,  maximum  7 
per   cent  free  fatty  acid  on  arrival  at  New  York"  to  a  Buyer  in  the 


60  COMMERCIAL   ARBITRATION 

United  States.  The  oil  was  to  be  shipped  in  bulk.  The  contract  pro- 
vided: " Samples  to  be  drawn  and  analysis  to  be  certified  by  licensed 
chemists  of  both  Buyer  and  Seller."  The  price  was  on  a  C.  I.  F.  basis, 
New  York,  net  landed  weight.  Payment  was  to  be  made  by  letter 
of  credit  covering  95  per  cent  of  the  contract  against  shipping  docu- 
ments. Subsequently  the  parties  agreed  upon  shipment  to  San  Francisco 
at  a  modified  price. 

Upon  arrival  of  the  oil  at  San  Francisco  and  immediately  after 
analysis  of  samples  taken  from  the  steamer's  tanks,  the  Buyer  made 
claim  for  a  refund  on  account  of  the  oil  having  been  contaminated 
with  mineral  oil  and  he  alleged  it  was  not  a  good  delivery.  The  claim 
was  for  one  cent  a  pound  on  778.71  long  tons,  or  $17,443.10.  Buyer 
contended  that  the  contract  was  a  modified  C.  I.  F.  contract,  and  that 
its  terms  permitted  sampling  and  determination  as  to  whether  it  was 
"fair  average  quality"  on  arrival,  in  addition  to  the  analysis  for  free 
fatty  acids.  He  claimed  that  a  florescence,  such  as  is  occasioned  in 
coconut  oil  after  contamination  with  mineral  oil,  is  a  decided  detri- 
ment to  the  oil  itself,  which  may  not  be  used  for  edible  purposes;  that 
this  florescence  was  present  after  refining,  if  indeed  it  was  not  more 
marked,  and  that  the  product  could  be  used  only  for  the  manufacture 
of  cheaper  soaps.  Buyer  insisted  that  because  of  this  florescence,  the 
oil  was  not  F.  A.  Q.  at  Pacific  Port  of  Entry,  as  required  by  the  contract. 

Seller  claimed  that  the  contract  was  essentially  C.  I.  F.  in  its  terms, 
and  that  the  only  modification  was  as  to  free  fatty  acids  and  landed 
weights;  that  the  oil  was  the  property  of  the  Buyer  from  the  moment 
of  shipment  at  Manila;  that  he  had  obtained  a  surveyor's  certificate 
of  the  cleaning  of  the  steamer's  tanks  prior  to  loading  the  oil;  that  it 
was  clearly  established  that  he  had  shipped  F.  A.  Q.  coconut  oil; 
that  the  Buyer  had  withheld  payment  of  5  per  cent  of  the  contract 
price  to  adjust  allowances  for  free  fatty  acids,  if  any  were  allowable 
on  account  of  the  acidity  being  more  than  5  per  cent  specified  in  the 
contract,  and  for  adjusting  on  the  landed  weights;  that  the  only  risks 
he  had  assumed  beyond  those  usual  and  incident  to  C.  I.  F.  contracts 
was  the  guarantee  that  the  oil  would  not  exceed  7  per  cent  in  free  fatty 
acids,  and  the  loss  in  weight  in  transit,  if  any. 

The  majority  arbitrators  in  this  matter  said: 

"The  point  at  issue  really  is  the  interpretation  of  the  clause  in  the 
contract  reading: 

Manila  Crude  Coconut  Oil,  fair  average  quality,  basis  5 
per  cent,  maximum  7  per  cent  free  fatty  acids  on  arrival  at 
New  York  (San  Francisco),  samples  to  be  drawn  and  analysis 
to  be  certified  by  licensed  chemists  of  both  Buyers  and  Sellers. 


REPORTS  61 

"From  the  literal  wording  of  this  clause  it  may  equally  well  be  read 
to  convey  that,  (1)  the  quality,  including  acidity,  is  guaranteed  by 
Seller  at  the  time  of  arrival  at  New  York,  or  (2)  that  the  intention  was 
to  ship  Manila  Crude  Coconut  Oil,  fair  average  quality,  at  time  and 
place  of  shipment,  (basis  5  per  cent,  maximum  7  per  cent  free  fatty  acids 
only  on  arrival  at  New  York). 

"In  this  contract  there  are,  for  want  of  a  better  term,  what  may  be 
called  three  'straddles',  which,  however,  are  not  unusual  in  a  C.  I.  F. 
contract.  These  are:  First,  the  quality  'straddle,'  whereunder  it  is 
customary  to  guarantee  only  acids  on  arrival;  second,  landed  weight, 
whereunder  it  is  customary  to  accept  Buyer's  weights  at  destination; 
third,  Buyer  reserving  the  balance  of  5  per  cent  of  the  value  to  take 
care  of  the  weights  and  free  fatty  acids  adjustments,  if  any. 

Held,  That  in  the  importing  business,  under  contracts  of  this 
character,  it  is  customary  for  the  Seller  to  guarantee  in  the  way  of 
quality  only  such  constants  as  he  may  be  able  reasonably  to  control, 
and  it  is  usual  in  importing  oil  to  guarantee  only  acidity.  As  this  is  the 
custom  of  the  trade  it  must  be  assumed,  in  the  absence  of  definite 
information  to  the  contrary,  that  this  contract  guaranteed  only  free 
fatty  acids,  and  could  not  be  interpreted  as  providing  the  additional 
insurance  against  contamination.  The  evidence  shows  that  the  Seller 
had  performed  all  that  was  required  of  him  under  the  contract  insofar 
as  procurement  of  freight,  responsibility  of  consignee  thereunder,  clean- 
ing of  steamer's  tanks,  furnishing  of  Surveyor's  certificate,  and  shipment 
of  contract  quality,  and  that  he  also  provided  marine  war  risk  insurance 
in  accordance  with  the  usual  custom  under  C.  I.  F.  terms.  There  was 
every  evidence  to  show  that  Manila  Crude  Coconut  Oil  F.  A.  Q.  was 
shipped.  If  the  Buyer  had  desired  to  purchase  oil  F.  A.  Q.  at  point 
of  American  delivery,  it  is  the  opinion  of  the  arbitrators  that  he  never 
would  have  accepted  this  form  of  contract.  Furthermore,  as  to  the 
intent  of  the  parties,  an  examination  of  the  telegrams  passing  between 
Buyer  and  Seller  at  the  time  of  sale  clearly  indicates  to  the  arbitrators 
that  both  parties  considered  this  transaction  C.  I.  F.,  except  as  to 
acidity  and  outweights,  and  there  was  no  suggestion  of  a  guarantee 
against  contamination  en  route  to  port  of  entry.  The  claim  of  Buyer 
is  disallowed  and  Seller  is  entitled  to  payment  in  full  for  the  oil.  (Foreign 
Commerce  Association  Arbitration  No.  36,  1921). 

Dissenting  Opinion — I  cannot  agree  with  the  majority  decision. 
This  is  not  an  unqualified  C.  I.  F.  sale  and  Seller  has  assumed  some 
risks  that  are  not  incident  to  unqualified  C.  I.  F.  sales. 

"Under  sales  C.  I.  F.  net  landed  weights,  or  C.  I.  F.  subject  to 
inspection  and/or  analysis  upon  arrival,  or  C.  I.  F.  payment  in  exchange 


62  COMMERCIAL  ARBITRATION 

for  delivery  order  on  dock,  etc.,  it  is  true  that  goods  are  for  Buyer's 
account  as  soon  as  delivered  to  and  accepted  by  the  ocean  carrier, 
and  all  terms  and  conditions  of  the  bill  of  lading  are  accepted  and 
agreed  to  by  Buyer  except  insofar  as  the  terms  and  conditions  of  the 
contract  qualify  the  usual  C.  I.  F.  sale. 
In  this  contract  the  clause  reading: 

Manila  Crude  Coconut  Oil,  fair    average    quality,  basis 
5  per  cent,  maximum  7  per  cent  free  fatty  acids  on  arrival 
at  New  York,  samples  to  be  drawn  and  analysis  to  be  certified 
by  licensed  chemists  of  both  Buyers  and  Sellers, 
would  ordinarily  be  interpreted  to  qualify  the  usual  C.  I.  F.  sale  as 
regards  determination  of  quality  being  made  at  point  of  arrival,  not 
only  as  to  the  free  fatty  acids  content,  but  also  as  to  whether  the  oil 
is  fair  average  quality,  thus  putting  on  Seller  the  burden  of  deterioration 
in  transit. 

"The  telegrams  passing  between  the  Buyer  and  the  Seller's  broker 
at  the  time  of  sale  are  silent  as  to  where  quality  is  to  be  determined  and 
are  therefore  of  no  assistance  as  indicating  the  intent  of  the  parties. 
If  the  telegrams  without  any  written  contract  were  to  be  interpreted 
they  could  only  be  taken  to  mean  that  the  quality  was  to  be  determined 
at  Manila,  not  only  as  to  F.  A.  Q.  but  as  to  acidity.  Therefore,  the 
telegrams  should  be  disregarded  and  this  case  decided  upon  its  merits 
from  a  construction  of  its  language,  which  should  not  be  forced  to 
agree  with  a  trade  custom. 

"It  would  appear  that  Seller  in  the  printed  language  has  expressed 
the  opposite  of  the  custom  of  the  trade  as  being  the  intent  of  both 
parties  to  this  contract,  and  for  this  reason  I  find  for  the  Buyer,  believing 
that  the  Seller,  had  he  intended  only  to  guarantee  acid  content  on 
arrival,  would  have  done  so  by  making  clause  read  along  the  following 
lines : 

Manila  Crude  Coconut  Oil,  fair  average  quality  at  time 
of  shipment.  Basis  5  per  cent,  maximum  7  per  cent  free  fatty 
acid  on  arrival  at  New  York,  samples  to  be  drawn  and  analysis 
as  to  free  fatty  acid  content  to  be  certified  by  licensed  chemists 
of  both  Buyers  and  Sellers. 

"It  is  a  very  serious  matter  indeed  to  upset  the  clear  phraseology 
of  a  contract,  in  order  to  conform  to  an  established  trade  custom. 
Buyer  and  Seller,  in  signing  a  contract,  are  presumed  to  have  clearly 
in  mind  the  points  on  which  they  have  agreed  and  if  the  language  of 
the  contract  is  clear  it  should  be  upheld  even  though  it  differs  from 
trade  custom.     Were  the  contract  ambiguous  in  language,  then  it 


REPORTS  63 

would  be  time  enough  to  consider  evidence  as  to  the  intent  of  Buyer 
and  Seller,  and  as  to  the  custom  of  trade. 

"Being  in  the  minority,  it  is  of  no  avail  to  assess  damages.  I  am  of 
the  opinion,  however,  that  the  allowance  claimed  by  Buyer  is  perhaps 
in  excess  of  the  real  measure  of  his  damages.  Were  the  majority  finding 
in  favor  of  the  Buyer  I  should  require  evidence  as  to  the  actual  out-of- 
pocket  loss  sustained,  if  any,  before  reaching  a  finding  as  to  the  amount 
of  damages."  (Foreign  Commerce  Association  Arbitration  No.  36, 1921). 

Similar  Issue  Decided  by  Other  Arbitrators — Buyer's  Re- 
sponsibility for  Deterioration  in  Transit — Qualified  C.  I.  F. 
Contract — Subsequent  to  Arbitration  36  reported  in  the  foregoing, 
a  somewhat  similar  matter  came  before  another  arbitration  board  of 
the  Foreign  Commerce  Association,  the  arbitrators  having  no  knowledge 
of  the  award  in  Arbitration  36.   The  facts  of  this  matter  are  as  follows: 

A  San  Francisco  Agent,  acting  for  his  disclosed  principal,  a  Manila, 
P.  I.,  oil  mill,  sold  a  quantity  of  Manila  Grade  Coconut  Oil,  500  tons 
each  to  be  shipped  April-May  and  May-June  to  the  Pacific  Coast. 
Seller  declared  the  S.  S.  "Ecuador"  as  to  500  tons,  but  this  vessel 
having  been  disabled,  he  substituted,  with  Buyer's  approval  and 
acceptance,  the  S.  S.  "Imlay"  for  both  lots  of  the  oil.  The  contract 
provided : 

"Quality:  Basis  five  (5%)  per  cent,  maximum  seven  (7%)  per  cent 
free  fatty  acid,  one-half  per  cent  Q/2%)  allowance,  account  excess 
acid,  for  each  point  in  excess  5%. 

"Inspection:  Samples  to  be  taken  and  analysis  to  be  made  by 
Curtis  &  Tompkins,  San  Francisco,  such  analysis  to  be  final." 

Upon  arrival  of  the  oil  at  San  Francisco,  Seller  caused  analysis  as  to 
acidity  to  be  made  by  Curtis  &  Tompkins,  chemists,  and  acidity  content 
was  shown  to  be  5.1  per  cent.  Buyer  caused  analysis  to  be  made  by 
the  same  chemists,  who  certified  that  there  was  florescence  present 
before  and  after  refining.  Buyer  claimed  that  this  was  due  to  con- 
tamination by  mineral  oil.  Buyer  contended  that  the  contract  was  a 
modified  C.  I.  F.  contract,  and  that  the  inspection  clause  covers  the 
quality  of  the  oil  as  an  entirety,  whereas  Seller  claimed  that  his  only 
guarantee  under  the  contract  was  as  to  acidity  of  oil  on  arrival,  and 
that  he  was  to  be  paid  for  landed  weights.  Seller  contended  that  as  to 
all  other  features  of  the  contract  the  conditions  were  C.  I.  F.,  and  that 
the  oil,  provided  it  came  within  the  acidity  limits  of  the  contract  on 
arrival  at  port  of  entry,  was  for  the  account  of  the  Buyer  as  soon  as 
shipped  at  Manila. 


64  COMMERCIAL   ARBITRATION 

Held,  That  there  was  a  complete  meeting  of  the  minds  of  the 
parties  on  a  C.  I.  F.  contract,  the  Seller  guaranteeing  the  acid  content 
of  the  oil  on  arrival  at  port  of  entry.  All  of  the  correspondence  passing 
between  Seller's  agent  at  San  Francisco  and  the  Buyer  leaves  no  doubt 
in  the  minds  of  the  arbitrators  that  the  transaction  was  on  a  C.  I.  F. 
basis,  except  as  to  the  acidity  of  the  oil,  as  already  noted.  Had  Buyer 
wanted  to  avoid  all  responsibility  for  the  oil  until  its  arrival  at  American 
port  of  entry  he  would  have  purchased  on  delivered  terms,  either 
F.  O.  B.  cars,  Pacific  Coast,  ex  dock  or  ex  ship.  The  Buyer's  claim 
is  disallowed.  (Foreign  Commerce  Association  Arbitration  No.  37, 1921). 

Responsibility  for  Excess  Acidity  of  Oil  on  Arrival  Under 
C.  I.  F.  Contract — Loss  of  Weight — Foreign  Certificate  of  Analysis 
— A  San  Francisco  merchant  purchased  from  a  Hongkong  merchant,  a 
quantity  of  " Peanut  Oil  under  2  per  cent  fatty  acids  as  per  Hong- 
kong Government  analysis  certificate,  C.  I.  F.  San  Francisco,  Cali- 
fornia."   The  transaction  was  completed  by  cable. 

On  arrival  of  the  oil  at  port  of  entry  three  samples  showed  free 
fatty  acids  to  be  2.32  per  cent,  2.61  per  cent  and  2.91  per  cent,  re- 
spectively, and  claiming  that  as  delivery  was  not  as  per  contract, 
which  called  for  less  than  2  per  cent,  Buyer  demanded  an  allowance 
of  one  cent  per  pound  on  the  1,000  case  shipment,  amounting  to  $744.31. 
Buyer  also  claimed  an  allowance  of  $96.73  for  shortage  in  lauded  weights 
of  the  1,000  case  lot  and  $297.83  for  shortage  in  the  2,000  case  lot,  the 
total  claim  being  for  $1,138.87  for  shortage  and  quality. 

Held,  That  the  loss  in  weight  on  both  lots  of  oil  must  be  borne  by 
Buyer  as  neither  hie  letter  of  March  14,  1919,  asking  for  offers  of 
Peanut  Oil,  nor  cables  exchanged  making  and  accepting  offers,  specified 
that  the  oil  was  to  be  sold  under  landed  weights.  The  letters  from 
Buyer  of  May  3,  1919,  and  May  5,  1919,  confirming  cables,  refer  to 
landed  weights  at  San  Francisco,  but  the  sales  had  been  made  and  the 
contracts  in  this  case  had  been  drawn  by  Seller  before  these  letters 
could  have  been  received,  as  the  contract  for  the  second  and  later  sale 
is  dated  May  19,  1919,  and  merely  specifies  price  to  be  C.  I.  F.  San 
Francisco,  California.  Buyer  should  have  specified  landed  weights  in 
his  cable  acceptance,  if  such  was  his  desire,  as  offer  did  not  specify 
landed  weights.  The  loss  in  weights  as  shown  by  Weigh  Master's 
Certificate  appears  to  be  only  the  usual  loss  in  shipment  of  this  oil. 

As  regards  the  claim  for  allowance  on  quality  of  the  1,000  case  lot, 
the  contract  for  this  lot  dated  May  19,  1919,  specified  "China  Peanut 
Oil  under  2  per  cent  fatty  acids  as  per  Hongkong  Government  analyst's 
certificate",  and  Buyer  accepted  this  contract  and  it  is  submitted  by 


REPORTS  65 

him  as  the  contract  in  this  case.  The  Government  Analyst's  Cer- 
tificate submitted  to  us  shows  free  fatty  acids  to  have  been  0.9  per  cent 
when  the  oil  was  shipped.  If  Buyer  desired  that  the  oil  should  be  under 
2  per  cent  free  fatty  acids  upon  arrival  he  should  have  so  specified  in  his 
cable  acceptance  or  should  have  notified  Seller  by  cable  upon  receipt 
of  the  said  contract,  as  he  then  had  knowledge  that  quality  was  based 
upon  analysis  at  Hongkong  and  it  is  a  well  known  fact  that  this  oil 
gains  acidity  during  shipment.  The  contract  in  this  case  was  C.  I.  F. 
San  Francisco  and  the  oil  therefore  was  the  property  of  Buyer  as  soon 
as  shipment  was  made,  and  if  the  quality  was  as  per  contract  at  that 
time,  which  the  Government  analysis  at  Hongkong  shows  to  have 
been  the  case,  shipment  was  made  by  Seller  as  per  contract.  Buyer 
is  entitled  to  no  allowance  on  account  of  excess  acidity,  Seller  having 
fulfilled  terms  of  his  C.  I.  F.  contract.  (Chamber  of  Commerce  Arbitra- 
tion, 1919). 

Rice  Sold  C.  I.  F.  in  Bond  Cuban  Port — Payment  by  Seller  of 
Duty — Congestion  of  Harbor — Buyer  Not  Injured — A  Pacific 
Coast  importer  sold  a  quantity  of  Rice  to  a  San  Francisco  merchant. 
Shipment  was  specified  to  be  from  Hongkong,  direct  or  indirect,  to 
Caibarien,  Cuba.  The  rice  wras  priced  C.  I.  F.,  in  bond,  Caibarien. 
Owing  to  congested  conditions  in  Cuba,  Seller  was  unable  to  obtain 
steamer  space  or  bonded  rail  cars  from  Havana  to  Caibarien,  and 
hence  paid  the  duty  at  Havana  for  his  own  account  and  shipped  the 
rice  by  rail  to  its  destination.  Buyer  contended  that  this  was  a  breach 
of  contract,  and  therefore  he  was  entitled  to  reject  the  Rice. 

Held,  That  Seller  used  due  diligence  and  acted  for  the  best  interests 
of  all  concerned  in  paying  duty  and  shipping  by  quickest  dispatch  to 
port  of  destination,  i.  e.  Caibarien,  and  absorbing  the  duty  for  his  own 
account.  It  is  an  admitted  fact  that  there  was  an  unprecedented 
congestion  and  lack  of  bonded  cars  and  available  steamers  at  that 
time  and  up  to  present  date,  thereby  precluding  a  Seller  from  strictly 
executing  a  contract  calling  for  delivery  in  bond  to  an  out-port  in  Cuba. 

Seller  had  the  option  of  shipping  by  vessel  or  by  rail  from  Havana 
to  Caibarien  and  his  responsibility,  under  the  contract,  ended  upon 
arrival  of  carrier  at  destination  and  Seller  was  not  obligated  to  deliver 
the  goods  in  any  warehouse.  Buyer  shall  accept  the  rice  and  pay 
invoice  cost,  without  interest.  (San  Francisco  Chamber  of  Commerce 
Arbitration,  1920). 

Responsibility  for  Extra  Freight  on  Changed  Routing  Under 
C.  I.  F.  Contract — Transhipment    Permitted — Extra  War    Risk 


66  COMMERCIAL   ARBITRATION 

—Late  Arrival  of  Part  of  Shipment— On  May  23,  1916,  A  sold  to  B 
two  Bolinder  engines  to  be  manufactured  in  Sweden  and  shipped  to 
San  Francisco,  shipment  to  be  made  at  Stockholm  within  six  months 
from  date  of  the  contract.  Payment  for  the  engines  was  to  be  in  three 
installments,  the  third  payment  to  be  upon  arrival  of  engines  at  San 
Francisco.  The  contract  contained  the  following  clause  relative  to 
shipment : 

"Shipment:  To  be  made  by  steamer  and/or  steamers 
direct  or  otherwise  from  Sweden  to  San  Francisco  via 
Panama  Canal  or  other  route  at  Purchaser's  option,  any 
additional  cost  to  be  on  Purchaser's  account  or  any  saving  to 
be  for  Purchaser's  benefit." 

In  August,  1916,  Buyer  was  notified  that  the  engines  were  ready 
for  shipment  and  on  the  25th  of  that  month  Seller  was  notified  to 
ship  the  same  around  Cape  Horn,  instead  of  via  the  Panama  Canal. 
Seller  accordingly  made  shipment  per  M/S  "San  Francisco,"  the  bill 
of  lading  being  dated  February  9,  1917,  although,  due  to  war  con- 
ditions, the  vessel  did  not  actually  sail  until  July  19,  1917.  The  "San 
Francisco"  transhipped  all  her  cargo  at  Arica,  South  America,  and  the 
shipment  of  engines,  with  the  exception  of  four  cases  thereof,  were 
forwarded  on  the  S.  S.  "Pennsylvania",  arriving  at  San  Francisco 
December  17,  1917.  The  four  cases  short  shipped  went  forward  on 
the  S.  S.  "Santa  Inez",  arriving  at  San  Francisco  February  21,  1918. 
On  December  17,  1917,  Seller  rendered  a  bill  to  the  Buyer  for  the 
third  payment  on  the  engines  and  included  therein  claims  for  the 
following  extra  cost  of  shipment  via  Cape  Horn  instead  of  via  the 
Panama  Canal,  which  he  asserted  was  on  Buyer's  account  under  the 
"shipment"  clause  in  the  contract: 

Extra  freight  charges $1,186.50 

Extra  war  risk  insurance 1,680.00 

Extra  Marine  Insurance 360.00 

Additional  exchange. 996.04 


Total $4,222.54 

Buyer  disputed  the  correctness  of  above  claim  and  due  to  delay 
in  settling  the  matter,  Seller  claimed,  in  addition,  interest  on  third 
payment,  $13,480.60  and  on  above  amount  of  extra  cost  from  date  of 
arrival  of  first  portion  of  shipment,  December  17,  1917,  to  date  of 
agreement  to  arbitrate,  April  20,  1918. 


REPORTS  67 

Taking  up  each  of  these  claims  separately,  the  arbitrators  found 
as  follows: 

Extra  Freight  Charges — Seller  charged  freight  on  83.10 
cubic  tons  at  the  rate  of  Kr.  89.4.  The  Committee  checked  Seller's 
bill  of  lading  and  found  that  the  engines  did  use  the  space  of  83.10 
cubic  tons  and  that  Seller  paid  for  said  freight  at  rate  of  Kr.  89.4. 
Seller  claimed  the  estimated  freight  cost  via  Canal,  when  making 
price  of  engines,  at  $15  per  cubic  ton  and  that  at  the  rate  of  exchange 
on  December  17,  37c,  the  extra  exchange  being  divided  as  per  contract, 
the  extra  freight  on  account  of  shipment  via  Horn  was  $1,186.50, 
which  amount  is  claimed.  No  basis  of  freight  via  Canal  was  given 
in  the  contract  but  the  Committee  through  its  own  independent  in- 
vestigation has  determined  that  a  rate  of  approximately  $15  per 
cubic  ton  via  the  Canal  did  prevail  about  December,  1917,  at  which 
time  the  engines  were  ready  for  shipment,  and  we  fix  $15  per  cubic 
ton  as  a  proper  basis  for  estimating  any  increase  in  freight  due  to 
change  in  routing. 

In  view  of  the  fact  that  Buyer  ordered  the  engines  shipped  via  the 
Horn,  which  he  had  the  right  to  do,  any  increase  in  freight  cost  thereby 
must  be  for  Buyer's  account. 

We  decide  that  the  claim  for  some  increase  in  freight  charges  is  a 
just  one  and  that  Buyer  shall  pay  same.  We  fix  the  total  amount  of 
said  increase  to  be  paid  by  Buyer  to  Seller  at  $1,156.37,  which  sum, 
for  reasons  hereinafter  given  under  the  item  "Additional  Exchange", 
is  made  up  from  the  extra  freight  due  on  each  of  the  two  shipments 
based  on  the  rate  of  exchange  at  the  date  of  arrival  of  each  shipment, 
as  follows: 

Shipment  arriving  December  17th  estimated  at 68.1  cubic  tons 

Shipment  arriving  February  21st  estimated  at 15 


a  n 


Total 83.1       "       " 

68.1  cubic  tons  x  Kr.  89.4-Kr.  6088.14  x  32%c $1,993.87 

15  cubic  tons  x  Kr.  89.4-Kr.  1341.00  x  30^c 409.00 

Total  Freight $2,402.87 

Less  83.1  cubic  tons  estimated  at  $15 1,246.50 

Total  Extra  Freight $1,156.37 

Extra  War  Risk  Insurance — Seller  claimed  he  estimated 
war  risk  insurance  at  2  per  cent  when  making  price  in  contract,  but 
that  he  had  to  pay  53^  per  cent  and  claimed  the  difference,  3J^  per  cent, 
should  be  for  Buyer's  account.    It  was  admitted,  at  the  hearing,  that 


68  COMMERCIAL   ARBITRATION 

no  definite  rate  could  be  secured  until  time  of  shipment,  due  to  changing 
war  conditions.  The  Committee  upon  investigation  determined  that 
a  rate  of  4  per  cent  via  the  Canal  could  have  been  secured  at  time  of 
shipment  and  that  shipment  via  the  Horn  was  considered  a  greater 
war  risk  and  higher  rates  charged  therefor.  We  therefor  fix  4  per  cent 
as  the  correct  basis  for  estimating  war  risk  insurance  via  the  Canal 
in  this  contract  and  we  decide  that  the  extra  insurance  of  1J^  per  cent 
on  $48,000  amounting  to  $720  is  to  be  paid  by  Buyer  to  Seller. 

Extra  Marine  Insurance — Seller  claimed  that  he  figured 
marine  insurance  under  the  terms  of  contract  (F.  P.  A.)  on  this  ship- 
ment at  134  per  cent,  but  was  charged  2  per  cent  and  he  claimed  the 
difference  of  %  per  cent  was  for  Buyer's  account.  We  have,  upon 
investigation,  determined  that  Seller  did  pay  2  per  cent  and  that  the 
extra  insurance  for  shipment  via  the  Horn  was  %  per  cent  and  for 
transhipment  at  Arica  was  x/i  per  cent.  Also  that  the  shipment  was 
actually  made  F.  P.  A.  and  that  the  rate  via  Panama  therefor  was 
1  per  cent.  Therefore,  we  decide  that  the  extra  cost  to  Seller  for  ship- 
ment via  the  Horn  was  %  per  cent  and  that  Buyer  is  to  pay  Seller 
$360  as  claimed. 

Additional  Exchange — In  the  contract  the  rate  of  exchange 
was  "based  upon  exchange  at  28j^c  per  Swedish  Krown"  and  "any 
difference  in  telegraphic  exchange  to  be  divided  equally  between  Buyer 
and  Seller."  Seller  claimed  payment  for  final  installment  on  those 
portions  of  the  engines  that  arrived  December  17,  1917,  at  37c 
exchange,  the  rate  that  day,  and  on  the  four  cases  arriving  February 
21,  1918,  at  the  rate  of  323^c  prevailing  that  day.  Buyer  claimed  no 
payment  on  third  installment  was  due  until  all  portions  of  the  engines 
arrived  and  that  the  rate  of  exchange  on  the  entire  shipment  should 
be  the  rate  prevailing  February  21st,  the  date  the  last  four  cases  arrived, 
for  reasons  set  forth  in  his  statement.  We  cannot  agree  with  Buyer's 
contention.  The  contract  does  not  provide  that  the  third  installment 
is  to  be  paid  upon  complete  delivery.  It  does  provide  for  payment  upon 
arrival  of  engines  at  San  Francisco.  Under  the  item  "Delivery"  in  the 
contract  is  an  exception  clause,  viz.:  "The  Seller  is  not  to  be  held 
liable  for  damages,  *  *  *,  or  for  loss  of  vessel  or  vessels,  or  for  all 
or  part  lost  en  route  or  while  discharging."  If  some  parts  of  the  engines 
had  been  lost  en  route  or  while  discharging  Buyer  could  not  claim 
under  this  contract  that  he  was  released  from  paying  Seller  for  the 
portions  that  were  delivered.  He  would  look  to  the  vessel  or  the 
insurance  to  reimburse  him  for  the  parts  lost. 

Both  parties  admit  this  was  a  C.  I.  F.  contract.     Seller  shipped 


REPORTS  69 

the  engines  complete  on  vessel  as  instructed  by  Buyer  and  received 
bill  of  lading  for  same.  He  had  the  option  under  the  contract  to  ship 
the  engines  by  more  than  one  vessel.  Buyer  knew  shipment  could 
be  by  more  than  one  vessel  and  also  that  the  Johnson  Line  bill  of 
lading  provided  for  transhipment  en  route  if  it  desired  to  do  so,  and 
therefore  there  was  no  certainty  that  shipments  via  the  Horn  would 
arrive  at  the  same  time,  although  there  was  a  reasonable  assurance 
that  would  be  the  case  via  the  Canal. 

We,  therefore,  find  that  Seller,  having  made  complete  shipment  as 
directed  by  Buyer,  was  entitled  to  payment  for  each  arrival  of  the 
shipment  at  the  time  it  arrived  and  that  the  rate  of  exchange  should 
be  on  that  basis. 

We  decide  that  Seller  is  entitled  to  payment  on  the  estimated 
value  of  the  shipment  arriving  December  17,  1917,  which  we  fix  at 
$10,230.60,  at  the  rate  of  exchange  on  that  date,  viz.  37c,  and  that  his 
portion  of  the  additional  exchange  on  said  amount  is  43^c  or  $434.80. 

That  Seller  was  entitled  to  2c  additional  on  the  estimated  value 
of  the  four  cases  arriving  February,  1918,  the  rate  that  day  being 
32J/2C,  which  value  we  fix  at  $3,250  and  the  additional  exchange 
thereon  being  $65,  making  the  total  amount  of  additional  exchange 
to  be  paid  Seller  $499.80. 

Interest. — For  the  reasons  set  forth  under  above  item  "Ad- 
ditional Exchange"  we  decide  that  Seller  was  entitled  to  reasonable 
interest,  which  we  hereby  fix  at  6  per  cent  per  annum,  on  the  aforesaid 
estimated  one-third  values  of  the  two  shipments  arriving  December  17, 

1917,  and  February  21,  1918,  respectively,  from  said  dates  to  April  20, 

1918,  as  follows: 

$10,230.60  at  6  per  cent  for  4  months  2  days $208.00 

3,250.00  at  6  per  cent  for  1  month  29  days 31.91 

Total  interest  on  third  payments $239.91 

We  also  decide  that  Seller  was  entitled  to  interest  at  same  rate  on 
the  amounts  herein  allowed  him  for  extra  freight,  extra  war  risk 
insurance,  extra  marine  insurance  and  additional  exchange  as  follows: 

Arrival  December  17 — 82  per  cent  of  total  shipment. 

Arrival  February  21 — 18  per  cent  of  total  shipment. 
82  per  cent  of  $2,636.17— $2,243.66  at  6  per  cent,  4  mos.  2  days.  .$45.62 
18  per  cent  of  $2,636.17— $492.51  at  6  per  cent,  1  mo.  29  days.  .     4.78 

Interest  allowed  on  extra  cost $50.40 


70  COMMERCIAL   ARBITRATION 

Recapitulation. — Buyer  shall  pay  to  Seller  in  full  settlement 
of  the  claims  in  this  case  the  following  amounts : 

For  extra  freight  charges .  .$1,156.37 

For  extra  war  risk  insurance 720.00 

For  extra  marine  insurance 360.00 

For  additional  exchange 499.80 

Total  allowance  on  claim  for  $4,222.54 $2,736.17 

Allowance  for  Interest: 

Interest  on  third  payments $239.91 

Interest  on  above  extras  allowed 50.40 

Total  Interest 290.31 

Total  amount  to  be  paid  to  Seller $3,026.48 

And  pursuant  to  the  terms  of  that  certain  agreement  dated  April  20, 
1917,  and  signed  by  both  parties  to  this  controversy,  submitting  this 
case  for  arbitration  by  the  Arbitration  Committee  of  the  San  Francisco 
Chamber  of  Commerce,  it  is  ordered  that  the  attorneys  of  the  respective 
parties  be  and  they  are  hereby  notified  to  pay,  from  the  sum  of  $4,222.54 
deposited  in  bank,  subject  to  their  joint  check,  to  Seller  the  sum  of 
$2,736.17,  as  above  awarded  to  him,  and  to  pay  the  remainder  of  said 
amount  so  deposited,  viz.:  $1,486.37,  to  the  Buyer. 

One  of  the  arbitrators  dissented,  saying: 

"I  agree  with  the  above  decision  on  all  items  except  those  of 
' Additional  Exhange'  and  'Interest',  to  which  I  dissent  as  I  believe  the 
rate  of  exchange  and  the  interest  should  be  based  upon  the  date  of  the 
arrival  of  the  last  portion  of  the  shipment,  February  21,  1918,  because 
I  consider  the  engines  had  not  arrived  until  that  last  portion  arrived." 

Under  a  C.  I.  F.  Contract,  Duty  Paid,  Seller  Is  Not  Responsible 
for  Wharfage  at  Port  of  Entry — C.  I.  F.  Denned — Foreign  Cer- 
tificate of  Quality  Governs — A  Pacific  Coast  importer  sold  to  a  New 
York  Buyer  certain  shipments  of  No.  1  Siam  Brewers'  Rice.  Seller 
guaranteed  the  rice  would  be  delivered  to  steamer  at  Hongkong  in 
first  class  condition.  Risk  of  deterioration  or  development  of  weevil 
in  transit  from  Hongkong  was  assumed  by  Buyer.  The  rice  was  priced 
C.  I.  F.  and  duty  paid,  Seattle,  Wash. 

Buyer  claimed  that  the  rice  was  of  inferior  quality  and  that  its 
condition  was  unsound;  that  it  was  infected  with  webs  and  worms  and 
that  it  must  have  been  unsound  when  shipped  at  Hongkong.  Buyer 
also  demanded  a  refund  of  $282,  wharfage  paid  by  Buyer  at  Seattle, 


REPORTS  71 

on  the  ground  that  the  contract  was  C.  I.  F.duty  paid,  Seattle,  and  the 
wharfage  therefore  should  have  been  for  Seller's  account. 

There  were  in  evidence  certificates  of  quality  of  Messrs.  Goddard 
&  Douglas,  marine  surveyors  at  Hongkong,  certifying  that  the  ship- 
ments had  been  examined  on  board  the  lighters  at  Hongkong,  that  the 
rice  was  in  sound  condition,  free  from  weevil  or  other  vermin  and  in 
good  order  for  shipment  to  destination,  and  that  the  shipments  were 
of  Fair  Average  Quality  of  the  grade  specified. 

Held,  That  as  the  certificates  showed  that  this  shipment  of  rice, 
as  per  bill  of  lading,  was  made  on  August  26th  and  the  surveyors' 
certificates  showed  that  their  examination  was  made  on  or  about  the 
same  date,  it  is  evident  that  the  Buyer's  contention  that  the  rice 
deteriorated  in  quality  and  condition  while  waiting  at  Hongkong 
prior  to  shipment  is  incorrect,  and  in  the  absence  of  evidence  that  the 
rice  was  not  in  sound  condition  the  certificates  of  the  surveyors  are 
accepted  that  the  shipments  were  properly  made. 

Second — As  regards  Buyer's  claim  for  a  refund  of  $282  wharfage 
paid  at  Seattle,  this  claim  cannot  be  allowed.  A  C.  I.  F.  shipment, 
duty  paid,  does  not  mean  that  Seller  mast  pay  wharfage  before  paying 
duty,  as  duty  can  be  paid  before  the  goods  are  removed  from  the 
wharf,  while  wharfage  need  not  be  paid  until  such  goods  are  so  removed. 
The  Seller,  therefore,  is  responsible  for  the  cost  of  the  goods,  the  in- 
surance, freight  and  the  duty,  and  any  other  charges  accruing,  including 
wharfage  charges,  if  any,  must  fall  upon  the  Buyer.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1915). 

When  Sale  Is  Predicated  on  Certain  Freight  Rate  and  Any 
Increase  Therein  to  Be  for  Buyer's  Account,  Seller  Must  Prove 
Such  Increase — A  San  Francisco  importer  sold  a  quantity  of  Ceylon 
Desiccated  Macaroon  to  a  San  Francisco  merchant,  and  the  goods 
were  shipped  in  two  vessels. 

In  this  case  Seller  charged  Buyer  $303.57  on  the  first  shipment 
and  $341.14  on  the  second  shipment  for  alleged  freight  difference, 
claiming  that  Seller  had  been  charged  that  difference  by  his  Colombo 
supplier  and  that  it  was  agreed,  when  the  sale  was  made,  that  any 
change  in  freight  or  exchange  was  to  be  for  the  account  of  Buyer. 

Buyer  disputed  these  extra  charges,  claiming  that  no  freight  rate 
was  designated  when  sale  was  made  and  that  it  had  not  been  established 
that  there  was  any  change  in  the  freight  rate  from  the  time  he  com- 
menced negotiation  with  Seller. 

It  was  in  evidence,  through  cables  exchanged,  that  in  the  previous 
negotiations  between  Seller  and  his  Colombo  supplier,  the  quotations 


72  COMMERCIAL   ARBITRATION 

made  were  for  New  York  delivery;  but  this  was  prior  to  Seller's  negotia- 
tions with  Buyer,  who,  on  July  8,  1919  bought  for  delivery  at  San 
Francisco,  any  increase  in  freight  (to  San  Francisco)  to  be  for  Buyer's 
account. 

Seller's  purchase  of  the  goods  was  based  upon  a  cablegram  from  the 
Colombo  supplier  sent  June  30,  1919,  and  received  July  6,  1919,  which 
quoted  a  C.  I.  F.  price  for  shipment  to  New  York,  subject  to  any 
increase  in  freight  or  exchange.  Seller's  cablegram  of  July  8,  1919, 
accepted  the  foregoing  offer  but  specified  shipment  to  San  Francisco. 

Seller's  supplier,  in  a  letter  dated  July  29,  1919,  called  attention  to 
the  fact  that  in  his  cable  of  June  30th  he  did  not  mean  an  increase 
of  freight  to  San  Francisco  over  New  York  rate,  but  meant  any  increase 
of  freight  over  the  then  present  rates  ruling. 

The  debit  note  of  Seller's  supplier  of  August  4,  1919,  for  $303.57 
freight  difference  is  based  upon  another  shipment  made  by  him  to  New 
York  on  July  20,  1919,  and  this  rate  is  based  upon  the  then  rate  of 
exchange,  the  rate  charged  being  in  English  Sterling,  while  the  freight 
charged  by  him  on  the  shipment  in  this  case,  as  shown  on  the  bill  of 
lading  of  the  S.  S.  "Colusa"  is  for  shipment  to  San  Francisco,  and 
the  rate  therein  is  $30  gold  per  ton  of  40  cubic  feet. 

Held,  That  Buyer  in  this  case  was  not  interested  in  any  rate  to 
New  York,  as  he  purchased  for  delivery  at  San  Francisco.  Seller  has 
not  shown  what  was  the  freight  rate  upon  which  the  C.  I.  F.  price  was 
quoted,  although  given  full  opportunity  to  do  so.  Buyer,  on  the  other 
hand,  has  submitted  to  the  committee  bills  of  lading  for  the  same 
class  of  goods  shipped  from  Colombo  to  other  San  Francisco  importers 
by  Pacific  Mail  Steamship  Company  vessels  on  May  31st  and  July  25, 
1919,  and  also  subsequent  to  the  date  of  the  shipments  in  dispute, 
in  which  the  same  rate  of  $30  per  ton  of  40  cubic  feet  was  charged  and 
he  claims  this  was  the  normal  rate.  After  carefully  examining  all  the 
evidence  submitted,  we  find  that  no  increase  in  freight  rate  from 
Colombo  to  San  Francisco  has  been  shown,  and  it  is  in  evidence  that 
the  rate  charged  by  Pacific  Mail  vessels  before  and  after  the  sale  in 
question  was  made  was  $30  per  ton,  which  was  the  rate  charged  on 
the  shipment  in  dispute.  Seller  is  not  entitled  to  charge  Buyer  with 
an  extra  freight  difference  of  $303.57  as  claimed  on  the  250  cases 
shipped  July  28,  1919.  This  award  shall  apply  to  the  second  shipment 
of  250  cases  made  August  20,  1919,  as  it  was  agreed  by  the  parties  at 
interest  that  any  decision  made  should  apply  on  both  shipments. 
(San  Francisco  Chamber  of  Commerce  Arbitration,  1920). 


REPORTS  73 

Arbitrators  Will  Interpret  Contract  Provisions  When  Parties 
Disagree  as  to  Whether  Sale  was  C.  I.  F.  or  Ex  Dock — Respon- 
sibility for  Excess  Charges — A  San  Francisco  importer  sold  to  a 
manufacturer  at  Portland,  Ore.,  a  full  cargo  of  Copra  ex  the  barkentine 
"Alta,"  and  there  arose  a  dispute  as  to  the  responsibility  for  certain 
extra  charges  resulting  from  the  discharge  of  the  copra  at  Portland. 
The  transaction  was  based  upon  an  offer  and  acceptance  under  dates  of 
July  14,  1917,  and  July  16,  1917,  respectively. 

The  Seller  contended  that  he  intended  and  understood  his  offer 
covered  a  C.  I.  F.  shipment,  while  the  Buyer  maintained  that  the 
contract  was  for  copra  ex  wharf.  The  contract  specified  ex  wharf  net 
landed  weights.  The  Seller  insisted  that  the  omission  of  a  comma 
after  the  word  weights  sustained  his  contention  that  the  contract  was 
intended  to  be  C.  I.  F.  and  that  the  weights  were  to  be  net  landed. 

When  the  copra  was  unloaded  extra  expense  was  incurred,  and  the 
real  question  at  issue  was  who  should  pay  therefor. 

The  arbitrators  said: 

"We  cannot  read  the  minds  of  the  contending  parties  to  this  con- 
tract, but  the  preponderance  of  testimony  as  to  the  intent  of  the  contract 
when  made  seems  to  be  in  favor  of  its  being  an  acceptance  of  a  C.  I.  F. 
offer.  We  recommend  that  hereafter  contracts  be  made  more  explicit, 
and  if  an  acceptance  departs  in  any  manner  from  the  terms  of  the 
offer  made,  that  the  items  in  the  offer  not  agreed  to  be  distinctly  referred 
to  in  the  acceptance. 

"In  view,  however,  of  the  supplementary  agreement  entered  into 
by  both  parties  at  interest  on  December  29,  1917,  that  any  dispute 
as  to  which  party  is  liable  for  the  expense  of  piling  copra  on  wharf 
is  to  be  submitted  for  arbitration,  we  decide  as  follows: 

"First:  We  decide  that  the  actual  cost  of  piling  and  confining 
the  copra  on  the  dock  after  it  has  been  deposited  by  the  vessel  on  the 
dock,  would  ordinarily  be  for  the  account  of  the  consignee  or  buyer 
of  the  cargo,  but  in  this  case  we  believe,  the  discharge  having  been 
expedited  by  the  vessel  to  an  extraordinary  degree  for  the  vessel's 
benefit  and  through  which  she  secured  quick  despatch,  that  an  allow- 
ance should  be  made  of  a  reasonable  amount  of  the  cost  of  the  piling 
equivalent  to  what  the  vessel  thereby  saved  through  such  quick  despatch, 
which  reasonable  amount  we  hereby  fix  at  the  sum  of  $1,000.00,  and  we 
decide  that  this  amount  of  the  cost  of  piling  be  for  the  account  of 
Seller. 

"Second:  We  decide  that  the  cost  of  shifting  copra  from  lower 
dock,  on  account  of  high  water,  to  upper  warehouse,  amounting  to 


74  COMMERCIAL   ARBITRATION 

$121.86,  according  to  bill  of  stevedores  submitted,  shall  be  for  the 
account  of  the  vessel,  as  the  piling  on  the  lower  dock  was  done  without 
the  consent  of  the  Buyer  and  the  vessel  was  responsible  for  any  error 
in  judgment  in  that  respect. 

"Third:  We  decide  that  any  expense  in  getting  the  copra  from  the 
vessel  on  to  the  dock,  including  the  building  of  chutes  into  which 
vessel  would  discharge  upon  the  dock,  shall  be  for  account  of  the  vessel. 

"Fourth:  We  decide  that  the  other  disputed  items  of  expense  in 
connection  with  the  piling  of  copra  on  the  dock,  shall  be  for  the  account 
of  Buyer. 

"Fifth:  We  cannot  agree  with  the  contention  of  Buyer  that  the 
entire  cargo  must,  if  Buyer  insisted,  be  landed  upon  the  dock  before  it 
could  be  tendered  to  Buyer  and  that  it  must  be  tendered  in  its  entirety. 

"Sixth:  In  making  this  award,  the  Committee  does  not  decide 
upon  the  correctness  of  the  amounts  of  the  charges  made  in  the  various 
items  of  expense,  as  the  Committee  does  not  feel  called  upon  to  attempt 
to  decide  this  as  the  contention  between  the  parties  is  confined  to  the 
point  as  to  which  party  at  interest  shall  pay  the  piling  charges,  or  a 
portion  thereof,  and  the  point  as  to  the  correctness  of  the  charges  made 
is  not  raised,  nor  was  any  evidence  proving  same  submitted.  (San 
Francisco  Chamber  of  Commerce  Arbitration,  1917). 

Date  of  Bill  of  Lading  Governs  as  to  Time  of  Shipment — 
Vessel's  Clearance  Does  Not  Control — A,  a  Pacific  Coast  importer, 
sold  to  B,  another  importer,  a  quantity  of  Rice  February-March-April 
shipment  from  Hong  Kong  to  Havana  for  transshipment  to  Caibarien. 
The  Buyer  sought  to  reject  the  rice  on  the  ground  that  shipment  had 
not  been  made  in  contract  time,  since  the  S.  S.  "Tsuyama  Maru," 
which  carried  the  goods,  had  not  arrived  at  Hong  Kong  until  May 
4th  and  had  sailed  from  there  May  7th.  The  Seller  maintained  that 
he  had  booked  the  steamer  space  for  the  rice  on  January  9th,  that 
he  had  delivered  it  to  the  carrier  April  20th  and  obtained  a  bill  of 
lading  therefor,  that  the  vessel  was  scheduled  to  sail  in  April  but  was 
delayed  in  arriving  on  account  of  weather  conditions. 

Held,  That  the  shipment  in  question  was  an  April  shipment,  as  the 
bill  of  lading  and  other  documents  are  dated  April  20th,  which  is 
evidence  that  the  goods  were  delivered  to  the  steamship  company 
within  the  required  time,  and  date  of  bill  of  lading  is  accepted  by  the 
trade  as  the  date  of  shipment,  unless  it  is  shown  that  the  bill  of  lading 
was  fraudulently  issued,  and  there  is  no  evidence  that  the  bill  of  lading 
in  this  case  was  fraudulently  issued.  (San  Francisco  Chamber  of 
Commerce  Arbitration,  1920). 


REPORTS  75 


CI 


aim 


A  Buyer  who  makes  an  allowance  to  a  subsequent  purchaser  on  the 
ground  of  alleged  inferior  quality,  when  goods  shipped  from  California 
arrived  in  Cuba,  without  having  consulted  with  the  original  Seller 
will  not  be  reimbursed  by  arbitrators  when  the  original  sale  was  on  an 
F.  O.  B.  California  point  basis.  (California  Bean  Dealers  Association 
Arbitration  No.  27,  1919,  Page  75). 

A  claim  for  adjustment  of  weights  of  Beans  sold  ex  warehouse 
on  a. basis  of  final  adjustment  on  basis  of  gross  delivered  weights  was 
modified  and  allowed  notwithstanding  that  it  was  made  by  Buyer 
twenty-eight  months  after  the  date  of  sale  and  purchase  and  after  the 
shipment  out  of  warehouse  of  the  last  carload  lot.  But  both  parties 
were  criticised  by  the  arbitrators  for  lack  of  due  diligence.  (San  Fran- 
cisco Chamber  of  Commerce  Arbitration,  1922,  Page  260). 

Seller  Not  Liable  Under  Settlement  Made  By  His  Buyer  With 
Another  Merchant  in  Foreign  Country — Unauthorized  Payment 
of  Alleged  Claim — Failure  to  Permit  Sampling — A  sold  B  a 
quantity  of  Tepary  Beans,  F.  O.  B.  Sacramento,  California,  and  on 
instructions  of  Buyer  shipped  the  goods  to  Havana,  Cuba,  where 
Buyer  had  resold.  The  ultimate  Buyer  in  Cuba  rejected  the  beans. 
Then  followed  correspondence  carried  on  by  cable,  with  the  result 
that  B  made  an  allowance  to  his  Cuba  Buyer  of  S3, 800.  B  therefore 
demanded  $2,600  from  A  in  settlement  of  B's  claim.  A  insisted  that 
as  this  settlement  was  made  without  his  authority,  knowledge  or 
consent,  with  a  person  not  a  party  to  A's  contract,  he  was  not  responsible 
therefor;  also  A  claimed  that  he  had  been  denied  the  privilege  of 
inspecting  the  goods  at  Havana  in  order  to  determine  for  himself  the 
true  condition  of  the  beans. 

Held,  That  the  original  Buyer  offers  no  proof,  save  his  own  state- 
ment, that  the  amount  of  $3,800  was  paid  in  settlement,  and  if  Seller  is 
responsible  for  any  portion  of  it,  whv  not  responsible  for  the  whole 
amount  rather  than  the  $2,600,  which  Buyer  expresses  his  willingness 
to  accept?  Any  settlement  made  by  Buyer  without  consultation  with 
and  approval  of  Seller  was  made  for  his  own  account,  and  claim  of 
Buyer  is  disallowed.  (California  Bean  Dealers  Association  Arbitra- 
tion No.  27,  1919.) 


REPORTS  77 


"Damage"  Clause 


Effect  of  Special  "Damage"  Clause — Buyer  Must  Take 
Delivery  of  All  Goods — A*  sold  to  B  a  quantity  of  Java  Peanuts, 
the  contract  calling  for  shipment  from  Java  by  steamer  and /or  steamers, 
direct  or  indirect  to  San  Francisco,  March,  1920.  The  goods  were 
priced  ex  dock,  duty  paid,  San  Francisco.  Shipment  was  effected 
within  contract  period  and  there  was  no  dispute  as  to  any  other  con- 
dition of  the  contract  not  having  been  met  by  the  parties,  except  the 
claim  of  quality.  When  tender  was  made  Seller  submitted  inspection 
certificates  of  the  San  Francisco  Chamber  of  Commerce  showing  the 
goods  to  be  F.  A.  Q.  of  the  season,  1919,  showing  a  slight  trace  of  vermin 
at  time  of  inspection.  Buyer  rejected  the  goods.  Seller,  without  waiving 
his  rights  under  the  contract,  thereupon  offered  to  make  a  second 
tender  of  another  lot  of  Java  Peanuts  that  had  been  reconditioned. 
Buyer  refused  to  consider  this  second  tender. 

Seller,  in  his  submission  to  the  Arbitrators,  acknowledged  that 
vermin  were  present  in  the  nuts,  but  claimed  only  a  slight  trace,  as 
stated  in  the  Chamber  of  Commerce  Certificate,  and  he  requested 
that  the  Arbitrators  determine  what  percentage,  if  any,  is  allowable 
in  F.  A.  Q.  Java  Peanuts.  He  further  claimed  that  the  following  clause 
in  his  contract  covering  "damage"  required  Buyer  to  accept  all  of  the 
goods  with  an  allowance: 

"Should  any  or  all  portions  of  the  goods  be  damaged,  Buyer  is  to  accept 
same,  but  with  an  allowance  from  Seller  to  be  determined  by  Arbitration, 
which  is  to  take  place  in  San  Francisco." 

As  to  the  percentage  of  vermin  in  F.  A.  Q.  Java  Shewed  Peanuts, 
the  Arbitrators  refused  to  fix  any  such  percentage,  but  confined  them- 
selves to  consideration  of  this  particular  tender.  As  to  the  "damage" 
clause,  it  was  the  opinion  of  the  Arbitrators  that  this  had  reference  to 
any  damage  whatsoever  that  may  have  arisen  after  shipment.  In  this 
connection,  Seller  claimed,  and  submitted  in  support  of  his  contention, 
a  report  of  a  local  marine  surveyor,  that  weevil  were  introduced  from 
a  lot  of  copra  cake  stored  in  the  vessel  in  the  vicinity  of  the  peanuts 
and  that  the  contamination  came  from  such  a  source.  Be  that  as  it 
may,  it  was  the  opinion  of  the  Arbitrators  that  the  "damage"  clause 
fully  covered  the  point  and  they  were  not  in  accord  with  the  views  of 
the  Buyer  that  it  was  limited  only  to  damage  by  fire  or  water,  but 
included  all  damage. 

A  careful  exmination  of  all  the  samples  submitted  revealed  the 
fact  that  a  portion  of  the  goods  did  contain  vermin,  while  the  greater 


78  COMMERCIAL   ARBITRATION 

portion  was  of  good  quality  and  wholly  within  the  specification  of 
F.  A.  Q.,  and  under  the  terms  of  the  contract  Buyer  must  take  delivery 
of  all  of  the  goods  with  an  allowance. 

Held,  That  Buyer  shall  accept  tender 'with  an  allowance  of  2J^c 
per  pound  on  the  damaged  portion  of  the  shipment,  paying  the  contract 
price  for  the  undamaged  portion.  The  damaged  portion  shall  be 
segregated  by  Seller  and  Buyer,  or  their  representatives,  at  Seller's 
expense,  and  the  allowance  shall  cover  the  goods  found  to  be  damaged. 
If  Buyer  and  Seller  fail  to  agree  as  to  the  damage,  the  arbitrators  herein 
will  participate  in  the  segregation  if  requested. 

Buyer  appealed  from  the  Award,  the  decision  of  the  Arbitrators  on 
Appeal  being  as  follows: 

" After  a  very  thorough  consideration  of  all  of  the  papers  in  this 
case,  the  contentions  of  the  respective  parties  and  the  conclusions  of 
the  original  arbitrators,  we  are  of  the  unanimous  opinion  that  the 
printed  "Damage  Clause"  in  the  contract  does  not  conflict  with  the 
typewritten  clause  subject  to  Buyer's  inspection  on  arrival.  The  latter 
clause  does  not  give  Buyer  the  option  of  rejecting  the  goods,  but  merely 
the  right  of  inspecting  to  see  whether  they  are  of  contract  quality, 
and  further  to  determine  what  if  any  claim  Buyer  has  a  right  to  make 
on  account  of  damage.  The  fact  that  vessel's  name  had  not  been 
declared  has  no  bearing.  It  is  commercially  practicable  to  recondition 
peanuts,  and  Buyer's  contention  in  paragraph  5  of  his  statement 
of  fact  that  he  cannot  determine  the  amount  of  the  damage,  is  not 
well  taken. 

"As  to  the  length  of  the  voyage  from  Java  to  San  Francisco,  it 
was  known  to  Buyer  at  the  time  he  entered  into  the  contract,  and  has 
no  bearing.  If  Buyer  felt  that  the  dangers  incident  to  transportation 
by  steamer  from  Java  were  more  than  he  cared  to  assume,  and  further 
felt  that  peanuts  for  shipment  from  Java  during  March  would  probably 
not  be  merchantable  upon  arrival,  he  should  not  have  signed  a  contract 
containing  the  "Damage  Clause"  and  should  further  have  protected 
himself  by  expressing  in  contract  his  real  intention.  The  contract  as 
drawn  binds  Buyer  to  take  delivery  of  the  goods  even  though  damaged, 
any  allowance  for  damage  to  be  fixed  by  arbitration. 

"As  to  the  Buyer  being  compelled  to  file  a  claim  on  transportation 
company,  Buyer  is  incorrect  in  this.  He  gets  his  allowance  from  Seller 
under  award  of  the  Arbitration  Committee,  and  if  Seller  feels  he  has  a 
just  claim  against  the  transportation  company,  it  is  then  up  to  Seller 
to  recover  his  loss  by  prosecuting  said  claim  against  the  transportation 
company. 


REPORTS  79 

"We  likewise  do  not  consider  that  Seller  in  any  way  prejudiced  his 
rights  on  his  original  tender,  by  reason  of  his  offer  of  other  goods  which 
was  merely  indicative  of  his  desire  to,  in  so  far  as  possible,  accommodate 
Buyer  to  the  extent  of  his  ability. 

"The  original  arbitrators  appear  to  have  gone  into  the  case  very 
carefully  and  to  have  determined  from  examination  of  the  samples 
that,  to  quote  the  original  decision:  "A  very  careful  examination  of 
all  the  samples  submitted  reveals  the  fact  that  a  portion  of  the  goods 
does  contain  vermin,  while  the  greater  portion  is  good  quality  and  wholly 
within  the  specifications  of  F.  A.  Q."  They  have  likewise  fixed  the 
sum  of  23^c  per  pound  as  a  fair  and  equitable  allowance  on  the  damaged 
portion,  which  we  feel,  after  a  personal  examination  of  the  still  existent 
samples,  should  stand. 

"We  feel  that  the  Findings  and  Award  of  the  original  arbitrators 
should  be  sustained,  and  have  no  reason  to  question  the  finding  of 
fact  as  to  the  quality  of  the  peanuts  and  the  proper  amount  to  be 
allowed.   The  original  decision  is  therefore  affirmed." 

Buyer  further  requested  a  review  and  reconsideration  of  all  issues, 
and  the  Appeal  Board  and  Original  Arbitrators,  sitting  en  banc,  rendered 
the  following  decision: 

"This  is  a  complete  reconsideration  of  the  above  entitled  case  based 
upon  a  petition  of  Appellant  dated  September  20,  1920,  asking  that 
the  matter  be  reopened  and  further  considered,  on  the  general  ground 
that  a  great  injustice  had  been  done  him  both  in  the  original  decision 
of  the  arbitrators  and  the  appeal  decision  affirming  same.  The  specific 
grounds  upon  which  it  is  alleged  this  injustice  has  been  done  are  fully 
set  forth  in  the  petition. 

"After  full  consideration  thereof  and  in  the  interest  of  bringing 
this  matter  to  a  final  and  equitable  conclusion,  the  respective  parties 
were  called  before  the  arbitrators  and  permitted  to  make  oral  state- 
ments, as  a  result  of  which,  with  the  consent  of  the  Respondent,  and  on 
the  petition  of  Appellant,  the  arbitrators  consented  to  reopen  this 
appeal  for  the  purpose  of  permitting  both  the  original  and  appeal 
arbitrators  to  give  the  fullest  collective  reconsideration  to  all  of  the 
issues  of  this  case  based  upon  the  entire  record,  the  petition  for  recon- 
sideration and  full  additional  samples  of  the  shipment  drawn  by  mutual 
consent  of  the  parties  and  in  their  presence  by  a  representative  of  this 
Association,  both  parties  hereto  having  in  consideration  of  such  reopen- 
ing of  the  case  confirmed  in  writing  their  former  agreements  to  abide 
by  and  act  in  accordance  with  this  final  decision.  The  petitioner, 
however,  added  the  following  conditions  to  his  confirmation : 


80  COMMERCIAL   ARBITRATION 

(1)  "It  shall  be  definitely  understood  that  oral  testimony  of 
Java  peanut  experts  will  be  taken  at  the  hearing;. 

(2)  "That  reconsideration  by  the  arbitrators  of  both  the  lower 
and  upper  boards  will  be  given  to  each  and  every  point  at  issue  in  the 
controversy,  particularly  to  the  so-called  damage  clause  in  the  contract. 

"The  foregoing  conditions  not  being  included  in  the  confirmation 
of  the  Respondent,  his  consent  and  approval  thereto  was  obtained. 

"After  the  fullest  consideration  of  this  case  by  the  arbitrators, 
which  included  a  re-examination  of  the  entire  record  and  each  and  nil 
of  the  allegations  and  issues  raised  thereby;  the  examination  of  one 
hundred  and  fifty  new  samples  drawn  from  the  shipment  in  the  presence 
of  both  parties  hereto  and  also  of  a  representative  of  the  Foreign 
Commerce  Association  both  by  the  arbitrators  and  disinterested  Java 
peanut  experts  called  for  the  purpose,  whose  oral  testimony  was  taken 
in  connection  therewith,  the  arbitrators  render  this  their  final  decision 
arrived  at  in  exact  accordance  with  the  conditions  and  requests  of 
the  respective  parties  and  unanimously  find  as  follows: 

"First.  That  the  Damage  Clause  in  the  contract  unquestionably 
applies  to  the  condition  of  the  goods  if  found  to  be  damaged  from  any 
cause  on  arrival,  and  Buyer,  having  agreed  thereto,  is  bound  to  accept 
the  goods  no  matter  what  the  condition  on  such  allowance  as  arbitrators 
find  is  just. 

"Second.  That  it  is  an  established  fact  that  F.  A.  Q.  Java  Peanuts 
of  a  given  season  shipped  at  the  time  provided  for  in  the  contract, 
commonly  known  as  between  season  shipment,  usually  show  more  or 
less  deterioration  of  the  character  herein  alleged  and,  therefore,  Seller 
was  only  using  ordinary  business  prudence  in  inserting  the  clause  in 
question  and  Buyer  had  every  reason  to  expect  the  peanuts  would 
show  a  variable  amount  of  deterioration  on  arrival. 

"Third.  That  the  original  sampling  proved  and  final  sampling 
confirmed  the  fact  that  the  shipment  both  at  time  of  tender  and  even 
at  the  present  was,  and  is,  in  no  way  below  what  might  have  been 
reasonably  expected  for  time  of  arrival. 

"Fourth.  That,  recognizing  the  difficulty  on  the  part  of  interested 
parties  to  agree  upon  a  fair  and  proper  allowance,  the  sum  of  2J^c  per 
pound  on  the  entire  shipment  is  allowed  as  a  fair  and  proper  allowance 
to  be  made  by  Seller  to  Buyer. 

"Fifth.  That  all  costs  and  charges  in  connection  with  shipment 
accruing  prior  to  August  13,  1920,  are  for  account  of  Seller  and  all 
warehouse  charges,  insurance  and  interest  at  the  rate  of  63^  per  cent 
on  deferred  payment  to  date  of  compliance  with  these  findings  are  to 
be  paid  by  Buyer."  (Foreign  Commerce  Association  Arbitration  No. 
21  and  No.  21  A,  on  Review). 


REPORTS  81 

Damages  for  Non-Acceptance. 

Buyer,  Refusing  to  Give  Instructions  and  Defaulting  in 
Payment,  Penalized  for  Difference  in  Market  Value — A  sold  to  B 
2,000  pockets  Fancy  California  Japan  Rice,  F.  O.  B.  cars  San  Francisco, 
December-January  shipment.  On  January  8th  and  thereafter  Seller 
asked  Buyer  for  shipping  instructions,  which  were  never  given,  and  on 
January  31st  Seller  billed  the  goods  to  Buyer,  who  refused  to  pay  the 
invoice.  The  price  of  the  rice  declined  from  $6.10,  the  sales  price,  to 
$4.15  per  100  lbs. 

Held,  That  Buyer,  having  given  no  adequate  reason  for  refusing 
to  take  delivery,  the  Seller  is  entitled  to  damages  in  the  sum  of  $4,175.14, 
with  interest  at  6  per  cent  from  January  31st  until  paid,  this  amount 
representing  the  difference  between  the  sales  price  and  the  market 
price  on  the  date  of  Buyer's  default  in  taking  delivery.  (Rice  Association 
of  California  Arbitration  No.  5-A,  1921). 

Damages  for  Non-Delivery 

The  general  rale  is  that  a  Buyer  is  entitled  to  damages  for  non- 
delivery of  goods  under  contract,  such  damage  being  the  difference 
between  the  contract  price  and  the  market  price  on  the  date  of  Seller's 
default  of  the  contract. 

Where  the  market  on  Rice  had  declined,  the  claim  of  a  Buyer  who 
alleged  damage  for  non-delivery,  in  the  sum  of  $2,070,  representing 
the  difference  between  his  purchase  price  and  the  price  at  which  he  had 
resold  to  another  purchaser,  was  disallowed.  Seller  had  been  prevented 
from  effecting  delivery  on  account  of  flood  conditions  and  had  asked 
for  an  extension  of  time  in  making  delivery.  The  market  had  declined 
between  the  time  of  the  purchase  and  the  expiration  of  the  delivery 
period.  (Rice  Association  of  California  Arbitration  No.  4,  1921,  Affirmed 
on  Appeal,  Page  88). 

When  Rice  is  sold  as  "now  rolling"  subsequent  discovery  that 
the  rice  was  short  shipped  will  not  excuse  Seller,  and  Buyer  will  be 
entitled  to  actual  damages  sustained  by  reason  of  the  short  shipment. 
(San  Francisco  Chamber  of  Commerce  Arbitration  1919,  Page  86). 

Under  a  contract  for  Beans  sold  for  shipment  from  Japan  in  the 
month  of  May,  Seller  notified  Buyer  under  date  of  June  16th  that 
he  had  failed  to  make  shipment,  and  the  damage  was  fixed  as  of  that 
date.  (San  Francisco  Chamber  of  Commerce  Arbitration,  1919,  Page 
83). 


82  COMMERCIAL   ARBITRATION 

Under  a  contract  covering  Pepper  sold  F.  O.  B.  cars,  San  Francisco, 
the  goods  to  arrive  per  a  named  vessel,  Seller,  without  obtaining  Buyer's 
instructions,  shipped  the  goods  from  port  of  entry,  and  Buyer  rejected, 
being  sustained  by  arbitrators  on  the  ground  that  shipment  was  not 
authorized,  and  he  was  awarded  damages  for  Seller's  default  in  the 
contract.  (San  Francisco  Chamber  of  Commerce  Arbitration,  1918, 
Page  83). 

A  Buyer  claiming  damages  for  non-delivery  of  Rice  sold  for  Novem- 
ber shipment,  F.  O.  B.  cars  San  Francisco,  was  not  sustained  on  the 
ground  (1)  that  shipment  was  delayed  by  unusual  floods  which  inter- 
fered with  river  and  rail  navigation  at  point  of  origin,  and  (2)  the 
Buyer's  claims  for  anticipated  profits  was  disallowed  upon  a  showing 
that  the  market  had  declined.  (Rice  Association  of  California  Arbitra- 
tion No.  4,  1921,  Page  88,  Approved  on  Appeal,  Page  90). 

When  a  sale  of  Rice  provides  that  Seller  shall  submit  a  sample 
on  a  specified  date  and  Seller  fails  to  submit  it  until  too  late  to  effect 
shipment  in  contract  time,  Buyer  is  entitled  to  damages,  which  were 
fixed  at  the  difference  between  the  sale  price  and  the  market  price  on 
the  date  by  default.  (Rice  Association  of  California  Arbitration  No.  5, 
1921,  Page  91). 

Under  a  contract  covering  Copra  sold  for  shipment  from  "Manila 
per  steamer  due  to  arrive  at  San  Francisco  January-February,  1918," 
failure  to  make  shipment  during  the  period  specified  or  at  all  will 
entitle  Buyer  to  damages  for  non-delivery,  the  damages  being  the 
difference  between  the  purchase  price  and  the  market  price  on  the 
last  date  possible  for  arrival  of  February  steamer.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1918,  Page  85). 

Bona  Fide  Sales  Must  Be  Fulfilled — Damages  for  Non- 
Delivery— Between  March  15,  1916,  and  June  23,  1916,  A  sold  to  B 
twenty  (20)  cars  of  California  Beans  and  failing  to  deliver  approxi- 
mately five  (5)  cars,  B  submitted  a  claim  for  the  difference  in  the 
purchase  price  and  the  market  price  on  the  last  date  shipment  could 
be  made  of  the  goods  called  for  in  the  unfilled  contracts.  A  contended 
that  he  had  purchased  the  beans  for  the  account  of  B  and  that  he  had 
not  in  fact  sold  them  to  B.  However,  B  submitted  the  original  contracts 
to  the  arbitrators  in  support  of  his  contention  that  the  goods  had  been 
purchased  by  him. 

Held,  That  the  transactions  were  bona  fide  sales  and  purchases  and 
that  A  had  failed  to  deliver  216,850  pounds  of  Beans  having  a  present 
market  valuation  of  $8.30  per  one  hundred  pounds,  and  that  B  was 
entitled  to  recover  the  difference  between  the  present  market  price 


REPORTS  83 

and  his  purchase  price,  namely  an  average  price  of  $4.75  per  hundred 
pounds.  (California  Bean  Dealers  Association  Arbitration  No.  22, 
1916). 

Damages  Fixed  as  of  Date  of  Default  in  Contract — A  sold  to  B 
100  tons  Manchurian  Kotenashi  Beans  at  $4.25  per  hundred  pounds 
C.  I.  F.  San  Francisco,  in  bond,  shipment  from  Japan  in  May,  1919. 
Seller  failed  to  make  shipment  in  fulfillment  of  the  contract,  and  on 
June  16th  notified  Buyer  of  the  default.  The  measure  of  damages 
was  a  matter  of  dispute. 

Held,  That  the  measure  of  damages  should  be  the  difference  between 
the  original  contract  purchase  price  of  $4.25  and  the  established  market 
value  of  $5.25  for  Manchurian  Kotenashis  on  June  16th,  date  of  the 
notification  by  Seller  to  Buyer  of  his  default  in  shipment,  which  date 
we  fix  as  the  one  upon  which  the  prevailing  market  price  shall  be 
used  in  establishing  the  measure  of  damages.  We,  therefore,  award 
$1.00  per  hundred  pounds  on  the  shipment  in  question  as  the  damages 
to  be  paid  by  Seller  to  Buyer.  (San  Francisco  Chamber  of  Commerce 
Arbitration,   1919). 

Affirmed  on  Appeal — Seller  appealed  from  the  foregoing  award, 
the  arbitrators  on  appeal  saying: 

"Buyer  had  the  right  of  re-buying  or  settling  within  a  reasonable 
time  after  notification  of  breach  of  contract  by  the  Seller. 

"A  C.  I.  F.  sale  has  absolutely  nothing  to  do  with  the  time  of  de- 
livery of  the  goods;  it  merely  refers  to  the  time  of  shipment.  We  feel 
that  the  date  the  Seller  notified  Buyer  should  be  the  date  of  settlement, 
and  in  view  of  these  facts  we  have  arrived  at  the  value  of  the  goods  by 
taking  the  market  value  on  the  date  of  the  breach  of  contract."  (San 
Francisco  Chamber  of  Commerce  Arbitration  on  Appeal,  1919). 

Shipping  Without  Instructions — Seller  Liable — Recon- 
ditioned Pepper  Not  Good  Delivery — A,  a  San  Francisco  importer, 
sold  to  B,  a  New  York  merchant,  25  long  tons  Singapore  Black  Pepper 
to  arrive  per  M/S  "Jutlandia,"  from  the  Orient,  for  delivery  F.  O.  B. 
cars  on  arrival  at  San  Francisco.  B  subsequently  sold  the  Pepper  to 
C,  a  San  Francisco  merchant.  Upon  arrival  of  the  cargo  at  San  Fran- 
cisco, A,  without  asking  for  instructions,  shipped  it  by  rail  consigned 
to  B  at  New  York.  Seller  then  notified  Buyer  of  the  shipment  and 
then  forwarded  documents,  whereupon  Buyer  telegraphed  Seller  that 
he  did  not  want  the  car  shipped  to  New  York,  having  sold  the  pepper 
to  C,  at  San  Francisco,  on  the  same  terms  as  purchased  from  A,  except 
that  the  price  was  one  cent  a  pound  higher.  B  insisted  that  he  had 
never  instructed  the  shipment  to  New  York  and  demanded  that  Seller 


84  COMMERCIAL   ARBITRATION 

tender  the  pepper  at  San  Francisco.  Seller  replied  that  the  car  was 
then  en  route,  but  he  would  divert  it  elsewhere,  and  make  delivery 
from  another  cargo  ex  dock.  The  pepper  that  was  on  the  dock  was 
reconditioned,  and  B  declared  that  this  was  not  a  good  delivery  and 
that  C  would  be  justified  in  rejecting  it. 

Held,  That  Buyer  is  not  required  to  take  delivery  under  the  terms 
of  the  contract  in  this  case.  We  decide  that  no  complete  tender  of 
delivery  of  pepper  ex  M/S  "Jutlandia"  was  made  by  Seller  in  ac- 
cordance with  the  terms  of  the  contract,  and  as  Seller  was  unable  to 
tender  full  delivery  from  the  vessel  of  the  required  quality  of  pepper 
Buyer  is  not  obliged  to  accept  the  pepper  offered  by  Seller. 

In  view  of  the  fact  that  Buyer  had  sold  the  twenty-five  (25)  tons  of 
pepper  in  question  to  C  prior  to  the  arrival  of  the  "Jutlandia,"  on  the 
same  terms  of  contract  as  in  the  contract  between  the  parties  at  interest 
in  this  case,  except  as  to  price,  and  the  understanding  was  that  Seller 
was  to  deliver  the  pepper  to  C,  who  would  pay  for  same  and  remit  to 
Buyer  simply  the  difference  of  one  cent  per  pound  in  the  price  to  be 
paid  by  C  to  Buyer  as  per  the  contract  between  them,  we  find  that 
Buyer  had  closed  his  transaction  so  far  as  he  was  concerned  when  he 
sold  the  pepper  to  C. 

Inasmuch  as  Seller  did  not  make  delivery  to  C  of  pepper  in  accord- 
ance with  the  contract  and  as  Buyer  could  not  buy  in  the  market  other 
pepper  and  deliver  to  C,  as  his  contract  with  C  called  for  delivery  of 
pepper  ex  "Jutlandia"  and  there  was  no  other  pepper  than  reconditioned 
pepper  that  could  be  tendered  as  delivery  from  that  vessel,  we  find 
that  Buyer  through  the  default  of  Seller  in  this  case  was  unable  to 
carry  out  his  contract  with  C  and  was  damaged  to  the  extent  of  the 
difference  between  his  purchase  price  and  his  resale  price. 

We  award  to  Buyer  as  damages  the  amount  of  Five  Hundred  and 
Sixty  Dollars  ($560)  being  the  difference  between  his  purchase  price 
from  Seller  and  his  sale  price  to  C  of  one  cent  per  pound  on  twenty-five 
(25)  long  tons  of  pepper,  which  amount  includes  his  expenses  for 
brokerage  paid  by  him  on  the  resale  to  C. 

We  disallow  the  Buyer's  claim  for  One  Hundred  and  Twenty-five 
Dollars  ($125)  profit  for  C,  which  it  is  claimed  C  would  have  made  if 
the  pepper  had  been  delivered  to  him  in  accordance  with  the  contract, 
as  C  is  not  a  party  to  this  case  and  the  only  questions  before  us  are : 

(a)  Whether  Buyer  must  take  delivery  of  twenty-five  (25)  tons  of 
reconditioned  pepper  ex  "Jutlandia". 

(b)  What  damages,  if  any,  he  sustained  through  default  in  de- 
livery by  Seller  of  pepper  as  per  contract.  (San  Francisco  Chamber 
of  Commerce  Arbitration,  1918). 


REPORTS  85 

Shutting  Out  of  Copra  by  Carrier  or  Default  of  Seller's 
Supplier  Does  Not  Excuse  Seller  for  Non-Shipment — Not  a 
Contingency  Beyond  Seller's  Control — Fixing  Damages  for 
Non-Delivery — Interest  Not  Allowed  on  Damages — A  Portland, 
Oregon,  importer  sold  to  a  New  York  crusher  500  long  tons  of  Fair 
Merchantable  Manila  Copra  in  bags,  for  shipment  from  " Manila 
per  steamer  due  to  arrive  at  San  Francisco  January-February,  1918." 
The  Copra  was  priced  F.  O.  B.  cars  San  Francisco. 

No  vessel  was  named  in  the  contract  nor  did  Seller  subsequently 
name  any  vessel  on  which  he  expected  to  ship  the  Copra,  although 
requested  repeatedly  to  do  so  by  Buyer  between  January  15,  and 
February  14,  1918.  On  February  16th  Seller  advised  Buyer  that  his 
suppliers  had  notified  him  that  the  Copra  had  been  shut  out  of  the 
S.  S.  "Kina,"  which  had  left  Manila  in  November,  1917.  Buyer 
insisted  that  the  contract  be  fulfilled  according  to  its  terms,  failing 
which  he  demanded  damages  in  the  sum  of  $14,840,  being  1.323/2  cents 
per  pound  on  the  contract  quantity,  together  with  interest  at  6  per  cent 
per  annum  from  February  28th  until  paid. 

Seller  contended  that  under  the  contract  he  was  only  called  upon 
to  make  delivery  by  shipment  from  Manila  per  steamer  due  to  arrive 
at  San  Francisco  January-February,  1918,  and  that  he  was  not  obligated 
to  make  San  Francisco  delivery,  the  term  F.  O.  B.  cars  San  Francisco, 
referring  only  to  the  price  at  which  the  Copra  was  sold.  He  claimed 
that  the  failure  to  make  shipment  from  Manila  was  due  to  the  default 
of  his  suppliers  and  he  maintained  that  this  default  was  beyond  Seller's 
control  and  therefore  he  was  relieved  under  such  a  clause  of  the  contract. 

Held,  That  under  the  contract  delivery  was  to  be  made  by  "ship- 
ment from  Manila  per  steamer  due  to  arrive  at  San  Francisco  January- 
February,  1918"  without  any  steamer  being  named.  Seller  therefore 
was  responsible  for  furnishing  Copra  shipped  from  Manila  by  some 
steamer  due  to  arrive  January-February,  1918,  and  was  not  obliged 
to  make  delivery  at  San  Francisco  from  local  stock  nor  was  Buyer 
obliged  to  accept  such  Copra,  if  it  had  been  tendered,  unless  he  choose 
to  do  so.  The  price,  however,  was  F.  O.  B.  cars  San  Francisco  which 
included  all  charges  until  Copra  was  delivered  on  board  cars  at  San 
Francisco. 

The  default  upon  the  part  of  Seller,  therefore,  was  in  not  shipping 
from  Manila  per  some  steamer  due  to  arrive  at  San  Francisco  in  January 
or  February,  1918.  The  default  was  not  failing  to  put  the  Copra  on 
board  cars  at  San  Francisco  on  or  before  February  28th,  for  Seller  was 
obliged  to  ship  from  Manila  on  time  and  not  from  San  Francisco. 
If  Seller  had  shipped  from  Manila  on  some  steamer  due  to  arrive  at 


86  COMMERCIAL   ARBITRATION 

San  Francisco  in  February  and  the  vessel  did  not  actually  arrive  at 
San  Francisco  until  after  March  1st,  Seller  would  have  fulfilled  his 
obligation  so  far  as  shipment  was  concerned. 

The  question,  therefore,  in  this  case  is  whether  Seller  defaulted  in 
shipment  for  reasons  beyond  his  control.  The  records  of  the  San 
Francisco  Chamber  of  Commerce  show  that  a  considerable  number 
of  vessels  arrived  at  San  Francisco  from  Manila  in  January  and 
February,  1918.  Seller  stated  that  it  was  expected  this  Copra,  or  a 
portion  of  it,  would  be  shipped  on  S.  S.  "Kina"  which  left  Manila  in 
November,  1917,  and  arrived  at  San  Francisco  December  15,  1917, 
and  no  satisfactory  explanation  is  given  in  the  testimony  as  to  wl^ 
such  shipment  was  not  made.  It  was  the  duty  of  Seller,  under  his 
contract,  to  see  that  space  for  this  Copra  was  secured  in  advance  on 
some  vessel  due  to  arrive  January-February,  1918.  If  Seller's  suppliers 
failed  to  make  necessary  engagements  at  Manila  to  ship  on  time, 
which  Seller  intimated  was  the  case,  that  does  not  relieve  Seller  of  his 
responsibility. 

There  is  nothing  in  evidence  to  show  that  it  was  beyond  Seller's 
control  to  secure  space  on  some  vessel  leaving  Manila  in  the  required 
time,  as  he  had  from  October  31,  1917,  to  January,  1918,  to  do  this, 
and  we  decide  that  Seller  is  liable  to  Buyer  for  reasonable  damages 
for  default  in  shipment  of  the  Copra  in  question,  which  damages  we 
decide  to  be  the  difference  between  the  contract  price  at  which  the 
Copra  was  sold  to  him  and  the  market  price  in  San  Francisco  at  the 
end  of  February,   1918. 

Having  established  the  market  price  of  Fair  Merchantable  Manila 
Copra  in  bags,  F.  O.  B.  cars  Pacific  Coast  to  be  934  cents  per  pound  on 
February  28th,  the  last  date  of  the  contract  period,  Buyer  is  entitled 
to  and  is  awarded  the  sum  of  $13,440,  which  is  the  difference  between 
the  contract  price  and  the  market  price  on  the  date  of  Seller's  default. 
Buyer's  claim  for  interest  is  disallowed  for  the  reason  that  interest 
on  damages  is  not  justified  unless  it  is  shown  that  Buyer  actually 
paid  out  money  for  Copra  to  take  the  place  of  that  not  shipped  and 
that  a  higher  price  had  been  paid  than  that  provided  by  the  contract. 
No  such  showing  was  made  by  Buyer.  (San  Francisco  Chamber  of 
Commerce  Arbitration,  1918). 

Damages  for  Short  Shipment  of  Rice  Sold  as  "Now  Rolling" 
— Seller  Responsible — A  San  Francisco  importer  sold  to  a  New 
Orleans  merchant  688  bags  of  No.  1  Saigon  Long  Rice,  F.  O.  B.  Pacific 
Coast.  It  was  specified  that  shipment  was  "now  rolling".  The  New 
Orleans  merchant,  relying  upon  the  statement  that  the  shipment  was 


REPORTS  87 

in  transit,  resold  the  rice  to  a  purchaser  in  Cuba.  Subsequently,  it 
developed  that  108  bags  of  the  rice  had  been  found  to  be  damaged  at 
Seattle,  the  point  of  shipment,  and  were  not  shipped  on  that  account. 
The  Seller  notified  his  Buyer  of  the  short  shipment  and  requested  that 
the  delivery  be  considered  complete  without  the  108  bags  in  question. 
The  New  Orleans  merchant,  however,  was  compelled  to  make  a  settle- 
ment with  his  purchaser  in  Cuba,  paying  the  sum  of  $500  as  damages 
for  short  shipment.  Buyer  demanded  reimbursement  of  this  sum,  but 
the  Seller  contested  the  claim,  contending  that  he  had  in  good  faith 
believed  that  the  full  quantity  had  been  shipped  at  Seattle  when  the 
sale  was  made. 

Held,  That  Seller  having  contracted  to  ship  688  bags  of  rice  and 
having  declared  that  this  number  of  bags  were  then  "rolling"  in  cars, 
was  obligated  to  make  full  delivery  or  failing  to  do  so,  Buyer  is  entitled 
to  reimbursement  for  the  actual  damage  sustained  because  of  the  short 
shipment,  in  this  case  $500.  (San  Francisco  Chamber  of  Commerce 
Arbitration,   1919). 

Seller  Liable  for  Non-Delivery  of  Coconut — Seller  Having 
Bought  All  Available  Supply  in  Coast  Market,  Buyer  Could 
Not  Purchase  for  His  Account — A  Pacific  Coast  importer  sold  to  a 
San  Francisco  merchant  200  cases  of  Coconut,  C.  I.  F.,  duty  paid, 
Seattle.  Seller  did  not  fulfill  the  contract,  and  contended  that  he  had 
definitely  canceled  the  contract  because  of  the  failure  of  his  supplier 
in  Colombo  to  ship.    Buyer  demanded  damages  for  non-fulfillment. 

Held,  That  Seller's  telegram  of  May  19,  1919,  to  the  broker  in  the 
transaction  was  not  a  cancellation  of  the  contract,  but  was  advice 
that  Seller  could  not  make  shipment  of  the  particular  goods  ordered 
from  the  original  supplier  in  Colombo,  and  was  in  fact  an  admission 
of  liability  to  deliver,  Seller  having  offered  $150  to  Buyer  to  cancel 
the  contract.  That  he  did  not  consider  the  contract  then  cancelled  is 
evidenced  by  the  fact  that  he  asked  Buyer  to  name  the  best  terms 
Buyer  would  accept  for  cancellation.  We  find  nothing  in  that  telegram 
to  indicate  that  they  did  or  would  refuse  to  deliver  other  coconut  if 
Buyer  insisted  upon  delivery  and  refused  cancellation. 

Again,  on  May  23rd,  Seller  offered  $300  to  be  released  from  his 
contract,  thus  plainly  indicating  he  recognized  the  contract  was  still 
in  force  and  that  he  was  liable  for  delivery  of  the  goods. 

We  feel  that  the  letter  of  Buyer  of  May  21st  to  the  broker  is  not 
an  acknowledgment  that  his  telegram  of  May  19th  was  notice  that 
Seller  was  entirely  unable  to  fulfill  his  contract,  but  was  simply  advice 
that  Seller  could  not  ship  from  his  original  suppliers  as  intended.    This 


88  COMMERCIAL   ARBITRATION 

is  borne  out  by  the  notice  given  by  Buyer  in  that  letter  that  he  must, 
therefore,  hold  the  Seller  to  his  contract  and  will  look  forward  to  delivery 
of  the  stocks  or  other  compensation  in  case  of  default. 

Again  on  May  26,  1919,  Seller  authorized  Buyer  to  purchase 
coconut  at  183^c  per  lb.  to  fulfill  his  contract,  thus  still  recognizing 
his  obligation  to  make  delivery  as  Seller  offered  in  the  same  telegram 
to  buy  spot  goods  in  San  Francisco  and  make  delivery  to  Buyer's 
San  Francisco  house  if  Buyer  could  not  purchase  at  18Kc  in  Seattle, 
and  so  requested. 

We  find  no  evidence  of  any  formal  and  official  notice  by  Seller 
that  he  could  not  and  would  not  perform  his  contract  until  June  2,  1919, 
and  he  admits  in  his  statement  that  he  had  in  his  possession  at  that 
time  170  cases  of  coconut  which  he  had  bought  in  San  Francisco, 
not  at  18J^c  but  at  19J4c  on  May  26th,  to  cover  if  Buyer  was  unable 
to  purchase  in  Seattle  at  18}/£c  and  should  call  upon  him  to  make 
delivery  to  his  San  Francisco  house  as  per  Seller's  offer.  It  was  also 
admitted  that  in  order  to  cover,  Seller  had  bought  up  at  19J^c  prac- 
tically all  the  coconut  in  the  San  Francisco  market,  so  Buyer  could 
not  have  purchased  there  if  he  had  tried  to  do  so  at  183^c. 

We  decide  in  this  case  that  Seller  is  liable  for  non-delivery  as  per 
contract.  We  decide  that  Buyer  is  entitled,  as  damages,  to  an  allowance 
of  the  difference  between  the  cost  to  him  delivered  at  Seattle,  duty 
paid,  of  the  200  cases  of  coconut,  purchased  to  fill  his  contracts  with 
his  Buyer,  and  the  cost  of  the  original  200  cases  C.  I.  F.  Seattle,  duty 
paid,  had  Seller  fulfilled  his  contract,  which  amounts  to  $1,704.08  as 
per  his  claim,  which  is  approved.  (San  Francisco  Chamber  of  Com- 
merce Arbitration,  1919). 

Floods  Interfering  With  Delivery  of  Rice  Excuse  Delay — 
"Extension  of  Time"  Clause  in  Rice  Contract — Where  Market 
Declines  Buyer  Is  Not  Damaged  by  Non-Delivery — A  San  Fran- 
cisco miller  sold  to  a  merchant  in  the  same  city  5,000  pockets  of  Fancy 
California  Japan  Rice,  November  shipment,  F.  O.  B.  cars  San  Fran- 
cisco. Of  this  quantity  2,700  pockets  were  delivered  November  30th, 
leaving  2,300  pockets  to  be  delivered  under  the  contract. 

Seller  claimed  that  he  was  prevented  by  floods  in  the  district  from 
which  he  intended  shipping  the  rice  from  effecting  delivery  within 
contract  time;  that  the  floods  followed  heavy  rains,  inundating  the 
fields  and  the  highways  to  the  warehouse  near  the  river,  "and  to  the 
railroad,  and  that  driftwood  in  the  Sacramento  River  had  interfered 
with  navigation  to  such  an  extent  that  the  river  steamers  were  tied  up. 
Seller  further  contended  that  rice  of  the  grade  called  for  in  the  contract 


REPORTS  89 

was  not  available  in  the  market  so  he  could  not  purchase  the  quality 
required. 

Buyer  claimed  that  he  did  not  purchase  any  specific  lot  of  rice,  but 
he  did  buy  rice  of  a  certain  grade,  which  was  obtainable  in  the  month 
of  November  and  could  have  been  purchased  by  the  Seller  to  fulfill 
the  contract.  Buyer  alleged  that  he  had  been  damaged  to  the  extent 
of  $2,070,  representing  the  difference  between  the  price  at  which  he 
had  bought  the  rice  and  the  price  at  which  he  had  sold  it  to  another 
merchant . 

The  Arbitrators  said: 

"The  original  contract  entered  into  stipulated  the  quantity  to  be 
5,000  bags,  and  the  evidence  indicated  that  2,700  bags  were  delivered 
after  the  vendor's  supplier  had  subscribed  to  due  notice  that,  on  ac- 
count of  flood  conditions,  that  it  had  been  impossible  for  him  to  move 
his  paddy  to  the  mill  by  team  or  truck  to  steamer  or  rail  landing. 
Further,  the  barges  had  been  unable  to  run  alongside  docks  or  ware- 
houses in  order  to  take  off  the  rice,  which  conditions  were  due  to  a 
series  of  heavy  torrential  rains  flooding  the  highways  and  fields,  causing 
the  river  to  rise  rapidly. 

"The  vendor,  under  the  contract,  was  obligated  to  make  delivery 
during  November  and  would  be  permitted  an  extension  only  on  showing 
that  he  had  been  restrained  and  delayed  from  delivery  by  valuing  upon 
the  liability  clause  in  the  California  Rice  Association's  Rail  Contract, 
and  by  showing  that  he  had  properly  disclosed  the  source  of  his  supply 
and  had  not  neglected  or  ignored  the  possibility  of  securing  other 
stocks  of  like  grade  with  which  to  make  proper  tender  during  the  month 
of  November. 

"A  careful  review  of  correspondence  and  exhibits  discloses  that 
Seller  had  exercised  due  diligence  in  notifying  the  Buyer  the  source  of 
supply  applying  to  the  contract  and  advised  Buyer  that  delivery  in  all 
likelihood  would  be  delayed  on  account  of  natural  causes. 

"The  result  of  an  investigation  of  warehouse  stocks  and  brokers' 
offerings  prove  the  endeavors  of  the  vendor  to  obtain  other  rices  of 
equal  grade  to  have  been  unavailing  on  account  of  scarcity  of  stocks 
spot  and  being  offered. 

"In  considering  Buyer's  contention  that  Seller  was  not  entitled  to 
value  on  the  liability  clause  in  the  contract  and  secure  relief  by  time 
allowance  to  make  full  delivery,  it  is  the  opinion  and  belief  of  the 
arbitrators  that  the  Buyer's  claim  should  have  been  set  up  as  being  the 
difference  between  the  contract  purchasing  price  and  the  sound  market 
at  the  time  Buyer  was  notified  that  delivery  would  be  delayed.     It  is 


90  COMMERCIAL   ARBITRATION 

obvious,  therefore,  that  the  claim  advanced  on  the  basis  of  the  Buyer's 
resale  price  should  not  be  used  to  fix  the  amount  of  Buyer's  claim 
against  Seller  in  this  case.  Therefore,  stating  a  hypothetical  case, 
in  the  event  that  stocks  were  available,  Buyer  should  have  stipulated 
with  Seller  as  to  the  price  necessary  to  afford  him  protection  or  actually 
buy  to  fill  his  contract  during  the  period,  in  order  to  legally  fix  the 
amount  of  loss  and  damage  sustained.  In  event  that  no  stocks  were 
available,  other  than  the  disclosed  source  of  supply,  it  is  equitable  to 
presume  that  both  the  Buyer  and  the  Seller  should  have  agreed  upon  the 
extension  of  time  necessary  to  complete  the  contract. 

"All  available  statistics  indicate  that  the  market  suffered  a  sharp 
decline  during  the  last  part  of  November.  It  becomes  most  apparent 
that  under  the  ordinary  procedure  of  establishing  such  claims,  had  the 
Buyer  attempted  to  fill  his  order  by  actually  buying  and  delivering 
rice  during  November,  he  would  have  been  unable  to  show  loss  or  set 
up  any  claim  whatsoever. 

Held,  That  in  view  of  the  foregoing  circumstances,  it  is  apparent 
that  Buyer  is  claiming  for  an  amount  of  anticipated  or  paper  profit 
without  due  consideration  to  the  customs  of  the  trade  or  the  ordinary 
legal  method  of  establishing  claims  for  loss  or  damage  sustained,  and 
it  is  our  opinion  and  decision  that  this  claim  should  be  disallowed  in 
justice  to  millers,  members  and  dealers,  who  value  on  actual  and 
substantial  trading  in  rice,  rather  than  on  technical  advantages  secured 
through  the  exchange  of  contracts.  (California  Rice  Association 
Arbitration  No.  4,    1921). 

Affirmed  on  Appeal — The  Buyer  appealed  to  the  Appeals  Com- 
mittee of  the  San  Francisco  Chamber  of  Commerce,  alleging  error  on 
the  part  of  the  original  arbitrators. 

Held,  That  the  sale  in  question  was  not  a  sale  of  any  specific  lot 
of  rice  nor  for  the  shipment  from  any  particular  point.  Buyer  submits 
in  evidence  that  rice  of  the  grade  purchased  was  available  in  the  market 
for  Seller  to  buy  and  make  delivery  within  the  time  of  delivery.  On  the 
contrary  the  evidence  submitted  shows  that  no  such  rice  was  available 
for  delivery,  and  the  evidence  shows  that  Seller  made  due  effort  to 
make  such  purchase  in  the  market  in  November,  Seller  having  asked 
for  a  few  days'  extension  of  time  which,  under  the  "Extension  of  Time" 
clause  in  the  contract,  he  was  entitled  to,  on  account  of  being  obstructed 
or  delayed  by  causes  beyond  his  reasonable  control  and  such  extension 
having  been  refused  by  Buyer,  the  claim  of  Buyer  for  $2,070  damages 
is  disallowed,  and  the  decision  of  the  Arbitration  Committee  of  the 
Rice  Association  of  California  is  affirmed.  (San  Francisco  Chamber 
of  Commerce  Arbitration  on  Appeal,  1921). 


REPORTS  91 

Failure  to  Submit  Sample  Until  Too  Late  to  Effect  Delivery 
on  Last  Day  of  Contract — Seller  Penalized  for  Default — A  sold 
to  B  500  pockets  No.  1  California  Japan  Brown  Rice,  F.  O.  B.  docks 
San  Francisco,  for  shipment  " November  24  to  November  26th",  subject 
to  approval  of  sample  to  be  submitted  by  Seller  on  or  before  November 
23,  1920.  The  Seller  did  not  submit  the  sample  until  November  26th, 
making  it  impossible  to  effect  shipment  that  date,  the  last  day  for 
shipment  under  the  contract. 

Held,  That  Seller,  not  having  fulfilled  his  obligation  under  the 
contract  and  No.  1  Brown  Rice  being  procurable  on  the  date  of  his 
default,  Seller  is  penalized  15  cents  per  100  pounds  on  500  pockets  of 
rice,  this  representing  the  difference  between  the  sale  price  and  the 
market  price  at  date  of  default.  (Rice  Association  of  California 
Arbitration  No.  5,  1921). 

Failure  of  Ocean  Transportation  Does  Not  Cancel  Contract — 
Seller,  Without  Cause,  Cannot  Rescind  Unless  Buyer  Consents — 
Notice  to  Seller's  Broker  Insufficient — A  Pacific  Coast  importer 
sold  to  an  Eastern  manufacturer  approximately  50  long  tons  Fair 
Merchantable  South  Sea  Sun-dried  Copra  in  bags,  shipment  to  be  per 
steamer  June  or  July,  price  8 }/$  cents  per  pound,  net  delivered  weights, 
F.  O.  B.  cars  Pacific  Coast.  The  contract  was  dated  June  5,  1917,  and 
was  negotiated  through  a  Chicago  broker. 

Seller  purchased  the  copra  from  a  supplier  in  Auckland,  New 
Zealand,  for  shipment  from  Sydney  to  Vancouver.  On  June  28th  the 
supplier  cabled  Seller  he  would  be  unable  to  ship  the  copra  as  the 
steamship  company  had  cancelled  all  bookings  for  copra  on  account  of 
danger  from  fire. 

Seller  claimed  he  immediately  notified  his  broker,  by  letter  on  June 
28th  and  asked  him  to  advise  Buyer,  further  particulars  to  follow  when 
received.  On  August  8th,  Seller  notified  the  broker  no  definite  advices 
had  yet  been  received,  but  on  November  7th  he  notified  him  that  final 
reply  had  been  received  that  the  suppliers  could  not  effect  shipment 
and  Seller  asked  broker  to  so  notify  Buyer  and  "have  them  wipe  the 
slate  clean  of  the  matter",  but  there  was  no  evidence  that  the  broker 
carried  out  these  instructions  to  notify  Buyer  of  Seller's  inability  to  ship. 

Seller  claimed  he  considered  this  failure  of  transportation  force 
majeure  or  emergency  beyond  his  control,  as  he  claimed  no  other 
transportation  was  available,  the  steamship  company  being  the  only  one 
carrying  copra  and  operating  between  the  ports  mentioned  at  that  time. 

Seller  claimed  he  considered  the  contract  as  cancelled  as  he  heard 
nothing  from  Buyer  until  the  following  January,  when  in  a  letter  of 


92  COMMERCIAL   ARBITRATION 

January  8,  1918,  Buyer  notified  Seller  that  on  January  5th  he  had 
written  to  the  broker  regarding  the  non-delivery  and  on  January  7th 
he  had  been  advised  that  Seller  claimed  the  copra  was  never  shipped, 
and  consequently  he  was  not  liable  under  the  contract.  That  Buyer 
could  not  accept  this  as  a  good  reason  for  non-delivery  and  he  at  that 
time  demanded  Seller  to  make  tender  and  if  not  made  he  would  have 
to  buy  in  the  open  market  against  the  contract  and  charge  Seller  with 
the  difference  between  the  market  and  the  contract  price. 

Seller  claimed  that  as  the  copra  was  sold  for  June- July  shipment 
this  would  mean  July-August  arrival  and  that  Buyer  had  no  right  to 
wait  until  the  following  January  to  advise  Seller  he  expected  delivery 
and  that  Buyer  forfeited  his  right  to  claim  by  not  making  protest  or 
claim  on  or  about  the  time  the  copra  should  have  arrived. 

Buyer  claims  he  never  received  notice  from  the  broker  of  the  delay 
or  inability  to  deliver  until  about  January  7,  1918,  and  was  not  obliged 
to  make  inquiry  of  Seller  regarding  delivery  and  that  Buyer  under  the 
contract  could  ship  copra  from  any  locality  by  any  steamer  as  long  as 
the  copra  was  of  the  designated  grade  and  was  shipped  in  June^July. 

On  March  18,  1918,  Buyer  notified  Seller  that  he  had  bought  in 
New  York  50  tons  mixed  Macassar  Copra  in  bags,  that  being  the 
cheapest  copra  he  could  find  approaching  the  quality  Seller  had  sold 
him,  and  had  paid  for  same  9}/£  cents  in  bags  F.  O.  B.  New  York, 
making  a  difference  of  72J^c  per  100  lbs.  or  $812  on  50  tons,  above  what 
the  original  copra,  if  delivered,  would  have  cost  at  Philadelphia,  and 
Buyer  made  claim  for  that  amount,  which  claim  was  denied  by  Seller 
and  referred  to  Arbitrators  for  adjustment. 

Held,  First: — That  Seller  did  not  have  the  right  to  cancel  the  con- 
tract or  consider  the  contract  cancelled  without  the  assent  of  Buyer,  on 
account  of  being  unable  to  ship  by  the  steamship  line  upon  which  he 
expected  to  ship,  as  under  the  contract  he  could  ship  from  any  port  in 
the  South  Seas  and  by  any  steamer  from  any  such  ports,  as  no  vessel  or 
port  of  shipment  was  named  in  the  contract  and  Seller,  when  making 
the  contract,  took  his  chance  of  being  able  to  ship  from  Sydney. 

Second — That  the  broker  was  acting  for  Seller  and  as  such  he  should 
have  carried  out  Seller's  instructions  and  notified  Buyer  upon  receipt 
of  Seller's  letter  of  June  28,  1917,  and  again  upon  receipt  of  his  letter 
of  November  7th,  and  a  definite  understanding  of  Buyer's  willingness 
to  cancel  or  otherwise  should  have  been  had  by  him,  but  we  further 
find  that  Seller  should  have  notified  Buyer  direct  and  obtained  an  answer 
from  him  as  to  whether  he  accepted  cancellation  or  not.  Seller  had  no 
right  to  assume  that  Buyer  accepted  cancellation  without  advices  from 
him  to  that  effect. 


REPORTS  93 

Third — That  Buyer  should  not  have  waited  until  January,  1918, 
before  making  inquiry  as  to  whether  the  copra  had  been  shipped  or 
loaded  on  cars  at  Coast.  This  was  not  a  C.  I.  F.  sale,  but  was  F.  O.  B. 
cars  at  Coast.  As  shipment  was  to  be  by  steamer  June- July,  Buyer 
had  the  right  to  expect  delivery  at  Coast  at  least  by  October  and  would 
expect  to  receive  in  October  documents  and  notice  of  loading  at  Coast 
and  by  what  railroad  shipped. 

Buyer  knew  on  about  January  20,  1918,  from  Seller's  letter  of 
January  15th,  that  Seller  had  not  shipped,  and  could  not  ship,  and  could 
not  make  a  tender  under  the  contract  and  the  evidence  shows  that 
Buyer  still  waited  nearly  two  months  before  buying  copra  on  the 
market  against  the  contract,  although  he  had  notified  Seller  on  January 
8th  that  failing  to  receive  tender  he  would  buy  copra  on  the  market 
against  the  contract  and  would  charge  Seller  with  any  difference  in 
price  over  the  contract  price.  This  it  was  his  duty  to  do,  but  he 
failed  to  act  upon  it  until  about  March  18th. 

We  find  that  Buyer  should  have  made  inquiry  of  Seller  in  December, 
1917,  at  the  latest,  as  we  consider  that  60  days  from  last  shipment  date 
was  the  longest  time  that  should  be  allowed  in  normal  times  for  delivery 
at  Coast,  but  due  to  unusual  conditions  existing  at  that  period  we 
believe  not  more  than  four  months  from  July  31,  1917,  the  last  date  of 
shipment,  to  be  reasonable  time  to  allow  for  delivery  of  the  shipment 
in  question,  which  would  mean  December  delivery  at  coast. 

We,  therefore,  think:  it  was  Buyer's  duty  to  make  inquiry  regarding 
this  shipment  within  at  least  four  months  after  July  31st,  whereupon 
he  would  doubtless  have  been  informed  that  shipment  had  not  been 
made  and  it  would  then  have  been  his  privilege  and  duty  to  buy  in 
open  market  against  the  contract.  It  will  be  noted  that  it  was  not 
until  November  that  Seller  had  final  notice  that  the  copra  had  not 
been  shipped  and  in  that  month  notified  the  broker  and  asked  to  have 
contract  cancelled  by  Buyer. 

We  decide  that  any  allowance  by  Seller  on  account  of  non-delivery 
should  be  based  upon  the  market  price  of  the  copra  in  question  at  the 
Pacific  Coast  in  December,  1917,  and  we  find  that  a  fair  market  price 
for  said  copra  in  bags  at  the  Coast  in  December  to  be  8%  cents. 

We  decide  that  Seller  shall  allow  and  pay  to  Buyer  as  damages  for 
non-delivery,  the  difference  between  said  December  market  price  at 
Coast,  8^4  cents,  and  the  contract  price  at  Coast,  8^  cents,  or  62J^ 
cents  per  100  pounds  on  the  50  tons  sold,  amounting  to  $700,  and 
that  said  payment  shall  constitute  full  settlement  of  the  claim  in  this 
case.     (San  Francisco  Chamber  of  Commerce  Arbitration,  1921). 


94  COMMERCIAL  ARBITRATION 

Failure  of  Supplier  to  Deliver  Barley  Does  Not  Excuse  Seller 
— Buyer  Entitled  to  Damages — Operation  of  Rule  Governing 
Prompt  or  Future  Shipments — A  sold  to  B  about  10,000  sacks  of 
Barley  delivered  at  Port  Costa,  California,  immediate  shipment  from 
San  Miguel,  quality  to  be  like  sample.  The  contract  was  made  June 
29,  1914.  Various  deliveries  were  made  against  the  contract,  the 
aggregate  deliveries  being  8,000  sacks  to  August  22,  1914.  September 
1st,  Seller  notified  Buyer  that  no  more  grain  would  be  delivered  on 
the  sale,  his  supplier  having  stated  that  no  more  deliveries  would  be 
made.  Buyer  refused  to  accept  the  notice  from  Seller  and  claimed  that 
the  balance  of  2,000  sacks  should  be  delivered.  As  this  balance  had 
not  been  delivered,  Buyer  notified  the  Seller  on  the  25th  of  September 
that  he  would  hold  him  to  deliver  the  balance,  or  to  settle  at  the  market 
difference.  No  more  grain  being  delivered,  Buyer  fixed  the  difference 
between  the  market  value  and  the  price  at  which  the  barley  was 
purchased  at  10c  per  cental. 

The  Seller  claimed  that  Buyer  did  not  exercise  his  option  of  claiming 
a  difference  on  account  of  non-delivery  within  the  time  as  contemplated 
by  the  rules  of  the  Grain  Trade  Association. 

Held,  That  Section  3  of  Rule  VI  reads  as  follows: 

"On  sales  of  grain  to  arrive  or  for  prompt  or  future  ship- 
ments, it  shall  distinctly  be  specified  within  what  number 
of  days  from  the  date  of  sale  the  grain  is  to  be  shipped,  to 
arrive  or  be  ready  for  delivery." 
No  time  as  contemplated  by  this  section  was  stated  in  the  memor- 
andum of  sale.    Had  it  been  the  intention  of  the  Seller  that  the  grain 
should  be  delivered  within  any  specified  time,  it  was  his  duty  to  so 
state  on  the  memorandum  of  sale.    The  committee  on  grain  decides 
that  Buyer  is  entitled  to  the  difference  in  price,  namely  10c  per  cental, 
on  the  balance  of  the  grain  undelivered,  said  to  be  2,0()0  sacks.     (San 
Francisco   Chamber  of  Commerce  Arbitration,    1914). 

Verbal  Agreement  Governs  When  Seller  Remains  Silent  Upon 
Receipt  of  Written  Notice  of  Buyer's  Understanding — Prices 
Subject  to  Subsequent  Opening  Prices — A  California  merchant 
sold  to  a  Chicago  dealer  a  quantity  of  Almonds  ex  warehouse,  Chicago, 
at  stated  prices,  and  verbally  guaranteed  that  the  prices  would  be  three 
cents  per  pound  less  than  the  opening  price  for  the  season  of  1920.  The 
facts  of  the  case  were  that  the  Buyer  had  been  given  an  option  about 
May  28th  on  a  certain  quantity  of  goods.  On  June  2nd  the  Buyer 
exercised  his  option  as  to  a  certain  portion  of  the  goods  subject  to 


REPORTS  95 

inspection,  and  did  not  purchase  other  lots  under  option.  On  June  16th 
Buyer  wrote  to  Seller,  saying  in  part: 

Kindly  confirm  your  verbal  agreement  guaranteeing  this 
purchase  price  will  be  at  least  three  cents  per  pound  less  than 
that  named  for  1920  crop. 

No  answer  was  made  by  Seller  to  this  letter.  Subsequently,  prices 
for  1920  crop  almonds  were  named  and  were  not  uniformly  three  cents 
per  pound  higher  than  the  price  at  which  the  nuts  in  question  were 
sold,  whereupon  the  Buyer  made  claim  for  $1,110.80,  which  he  claimed 
was  the  difference  between  the  sales  price  and  the  opening  price  for 
new  crop  goods.  Seller  contended  that  he  did  not  make  a  guarantee  as 
to  prices  being  three  cents  a  pound  lower  than  the  opening  price  as  new 
crop  nuts,  but  had  remarked  casually  that  he  would  do  so  if  the  Buyer 
exercised  his  option  on  all  the  nuts  offered.  Seller  maintained  that  Buyer 
never  accepted  the  offer,  but  instead  selected  only  a  portion  of  the  lot, 
and  that  it  was  absurd  to  claim  that  the  offer  of  a  price  guarantee 
applied  on  any  portion  of  the  lot  when  it  was  the  clear  intent  to  make  it 
applicable  only  to  all  the  nuts  under  option. 

Held,  That  Buyer  did,  on  June  16th,  ask  for  a  written 
confirmation  of  this  purchase  and  the  application  to  it  of  the 
verbal  agreement  previously  referred  to,  which  request  was  ignored 
by  Seller.  In  the  opinion  of  the  arbitrators,  this  request  on  the 
part  of  the  Buyer,  indicating  as  it  did  his  belief  that  the  purchase  was 
subject  to  the  agreement,  should  have  received  prompt  attention  by 
the  Seller,  and  that  in  the  absence  at  that  time  of  any  denial,  is  to  be 
construed  as  tacit  consent  on  the  part  of  the  Seller  that  the  terms 
referred  to  were  to  apply  to  the  purchase.  The  contention  of  the  Buyer 
having  been  made  clear  in  his  letter  of  June  16th,  Seller  was  again 
remiss  in  not  disclaiming  the  agreement  in  connection  with  the  sale  on 
June  29th  of  twenty-six  bags  of  nuts.  Buyer  is  entitled  to  reimburse- 
ment in  the  sum  of  $1,110.80,  representing  the  difference  between  the 
purchase  price  and  the  opening  price  for  new  crop  nuts.  (Dried  Fruit 
Association  Arbitration  No.   1,  1921). 


96  COMMERCIAL  ARBITRATION 

Damages  for  Resale 

In  general,  under  the  rules  of  various  associations,  a  Seller  is  not 
justified  in  diverting  and  reselling  goods  over  which  a  dispute  has 
arisen  when  a  contract  calls  for  arbitration  and  the  other  party  is 
willing  to  arbitrate  his  differences. 

Diversion  and  Resale  of  Goods  Not  Justifiable  When  Arbitra- 
tion of  Dispute  Is  Requested — Buyer  Has  Right  of  Settlement 
by  Arbitration — A,  a  California  packer  of  dried  fruits,  sold  to  B, 
a  New  York  merchant,  a  quantity  of  Prunes  under  the  Uniform  Dried 
Fruit  Water  Contract.  When  the  Buyer  received  Seller's  contract  he 
objected  to  certain  provisions  therein,  and  Seller  wrote  to  his  New 
York  representative  that  he  had  deleted  the  objectionable  part  of  the 
contract  and  that  he  was  "returning  same  duly  signed".  When  the 
draft  was  presented  to  Buyer  he  declined  to  honor  it  on  the  ground 
that  the  inspection  certificate  did  not  cover  what  he  claimed  was  an 
important  contract  requirement,  viz.:  the  words  highly  processed 
for  water  shipment. 

When  the  contract  was  presented  to  the  arbitrators  it  was  not 
altered  in  any  way,  notwithstanding  Seller's  statement,  above  noted,  that 
he  had  made  the  alteration  therein.    On  this  point  the  arbitrators  said : 

"It  is  assumed  that  Seller  agreed  to  same,  for  had  he  not  been 
willing  to  do  so,  he  had  opportunity  to  advise  the  steamship  company 
to  delay  shipment  until  he  could  straighten  out  the  matter  with  his 
Buyer  or  his  brokers,  or  to  have  instructed  the  Dried  Fruit  Association 
of  California  to  embody  this  requirement  in  the  application  for  in- 
spection, thereby  making  it  a  condition  precedent  to  the  issuance 
of  certificate  of  quality". 

When  Buyer  refused  to  honor  the  draft,  Seller  immediately  diverted 
the  shipment  and  attempted  to  cancel  the  contract.  Buyer  objected, 
demanding  damages  for  Seller's  unwarranted  diversion  and  resale, 
on  the  ground  that  the  contract  called  for  the  settlement  of  any 
disputes  by  arbitration  and  asserting  his  willingness  to  submit  the 
matter  to  arbitrators. 

Held,  That  as  the  Uniform  Dried  Fruit  Contracts,  both  Water  and 
Rail,  call  for  arbitration  in  case  of  any  disagreement,  Seller  had  no 
right  to  divert  and  dispose  of  the  goods  without  Buyer's  consent. 
Therefore,  Seller  is  directed  to  pay  Buyer  the  difference  between  the 
sale  price,  F.  O.  B.  San  Francisco,  and  the  market  value  of  the  goods 
at  time  of  arrival  of  same  at  New  York,  representing  the  value  thereof 
to  Buyer  on  that  date.  (Dried  Fruit  Association  of  California 
Arbitration  No.  140,  1913). 


REPORTS  97 


Declaration  of  Vessel 

The  Foreign  Commerce  Association  of  the  Pacific  Coast  has  two 
rules  covering  "Declaration  of  Vessel";  Rule  No.  11  applying  to  general 
commodities  and  Rule  No.  261  (identical  with  Rule  7,  Section  1,  New 
York  Produce  Exchange)  applying  to  Vegetable  Oils.  Rule  11  reads 
as  follows: 

"If  a  shipment  or  part  thereof  be  lost,  such  contract  shall 
be  void  for  the  portion  lost  if  name  of  vessel  has  been  de- 
clared by  Seller  and  satisfactory  proof  of  shipment  from 
abroad  has  been  submitted  to  Buyer.  If  a  shipment  or  part 
of  same  is  lost  before  Seller  has,  through  delay  in  cables  or 
mails  or  from  other  causes  beyond  his  control,  received  ad- 
vance advice  of  shipment,  Seller  shall  be  relieved  from  mak- 
ing declaration  as  regards  that  portion  of  the  contract.  If 
after  having  been  named  vessel  is  lost  before  reaching  loading 
port,  contract  shall  be  void  for  the  goods  to  have  been  shipped 
in  the  vessel  named." 

Foreign  Commerce  Association  Rule  No.  261  (New  York  Produce 
Exchange  Rule  7,  Section  1),  reads  as  follows: 

"When  contracts  stipulate  that  shipments  are  to  be  made 
from  foreign  countries  or  American  colonies,  declarations  shall 
be  made  by  Seller  within  48  hours  of  receipt  of  mail  or  cable 
advices  of  shipment.  If  in  execution  of  any  contract,  a  ship- 
ment or  part  thereof  be  lost,  such  contract  shall  be  void  for 
the  portion  lost,  if  name  of  vessel  has  been  declared  by  Seller 
and  satisfactory  proof  of  shipment  been  submitted  to  the 
Buyer.  If  a  shipment  or  part  of  same  is  lost  before  the  Seller 
of  a  shipment  from  foreign  countries  or  American  colonies  has, 
through  delay  in  the  mail  or  from  other  causes  beyond  his 
control,  failed  to  receive  advance  advice  of  shipment,  the  dec- 
laration shall  be  waived  by  the  Buyer  as  regards  that  portion 
of  the  contract  as  may  have  been  lost;  provided  that  Seller 
must  bring  satisfactory  proof  of  the  facts.  Should  vessel 
arrive  before  declaration  has  been  made  and  extra  expense 
been  incurred  through  these  circumstances,  such  expenses  are 
to  be  borne  by  the  Seller." 

Rule  No.  262  is  as  follows: 

If  Seller  fails  to  declare  the  foreign  shipment  (of  Vegetable 
Oil)  45   days  after  the  stipulated  contract  period,  it  shall  be 


98  COMMERCIAL   ARBITRATION 

considered  as  non-compliance  with  contract.  (Foreign  Com- 
merce Association  Rule  262,  New  York  Produce  Exchange, 
Rule  7,  Section  3). 

Declaration  Not  Obligatory — The  general  rule  is  that  declaration 
of  name  of  vessel  is  not  obligatory  upon  Seller  in  the  absence  of  a 
specific  agreement. 

Where  the  contract  does  not  so  provide  no  obligation  rests  upon 
Seller  to  declare  to  Buyer  date  of  shipment  or  name  of  vessel  prior  to 
tender.   (Importers  and  Exporters  Association  Arbitration  No.  5,  1919). 

Declaration,  Once  Made,  Cannot  Be  Withdrawn — But  where 
a  declaration  has  been  made  Seller  cannot  withdraw  same  or  substitute, 
without  Buyer's  consent. 

Declaration  in  "Full  Cargo* '  Sales — A  declaration  is  not  of 
necessity  incumbent  upon  Seller  on  Full  Cargo  sales,  as  the  cargo  of 
an  unidentified  vessel  might  be  sold  in  any  position.  But  if  the  vessel 
has  been  named,  the  declaration  cannot  be  changed  without  Buyer's 
consent. 

Rejection  of  documents  under  a  C.  I.  F.  sale  of  Rice  on  the  ground 
that  Buyer  had  declared  one  vessel  and  thereafter  presented  documents 
covering  another  vessel  and,  further,  that  the  delivering  carrier  was 
routed  via  the  Suez  Canal,  was  not  sustained.  Where  there  was  a  conflict 
in  the  evidence  as  to  the  finality  of  the  first  declaration,  arbitrators 
resorted  to  the  contract  itself.  (Rice  Association  of  California  Arbitra- 
tion No.  9,  1920,  Page  99). 

Where  a  Seller  seeks  release  from  a  contract  under  the  operation 
of  force  majeure  he  must  have  declared  the  vessel  to  the  Buyer,  failing 
which  he  will  not  be  excused  for  non-delivery.  (San  Francisco  Chamber 
of  Commerce  Arbitration,   1920,  Page  98). 

Failure  to  Declare  Vessel — Goods  Lost  at  Sea — Seller  Must 
Complete  Contracts — Identification  of  Goods — A  Pacific  Coast 
importer  sold  a  quantity  of  Green  Coffee  to  another  importer,  under 
two  contracts,  each  containing  the  following  printed  clause:  No 
arrival,  no  sale,  in  case  of  coffee  actually  shipped  but  lost  in  transit. 

The  Seller  claimed  that  a  portion  of  the  coffee  intended  to  apply 
on  the  Buyer's  contracts  was  shipped  per  the  S.  S.  "San  Mateo",  and 
that  this  vessel  being  lost,  he  was  thereby  released  from  his  obligation 
to  make  delivery  as  to  that  amount  of  the  coffee.  Buyer  claimed  that 
the  identification  of  the  lost  coffee  was  incomplete,  so  far  as  his  contract 
was  concerned,  and  he  was  entitled  to  full  delivery. 


REPORTS  99 

Held,  That  in  this  case  there  was  no  positive  identification  of  the 
particular  lot  of  coffee  that  was  to  be  delivered  to  Buyer  as  being  the 
particular  coffee  that  went  down  on  the  S.  S.  "San  Mateo."  Further- 
more, this  was  to  be  a  tender  of  delivery  at  San  Francisco  and  no 
vessel  was  named  during  the  life  of  these  contracts,  by  Seller  to  Buyer, 
prior  to  the  loss  of  the  S.  S.  "San  Mateo",  and  unless  so  named  Buyer 
was  not  interested  in  the  loss  of  the  "San  Mateo."  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1920). 

Affirmed  on  Appeal — This  matter  went  to  Appeal,  Seller  sub- 
mitting an  affidavit  that  he  intended  to  apply  the  coffee  shipped  per 
S.  S.  "San  Mateo"  to  the  Buyer's  contract. 

• 

Held,  That  Seller  cannot  claim  protection  under  the  clause   No 

arrival,  no  sale  in  case  of  coffee  actually  shipped  but  lost  in  transit  unless 
the  vessel  carrying  the  goods  is  named  to  Buyer  prior  to  her  loss. 
(San  Francisco  Chamber  of  Commerce  Arbitration  Appeal,  1920). 

Where  Evidence  as  to  Declaration  of  Vessel  Conflicts,  Ar- 
bitrators Will  Resort  to  Contract — Under  C.  I.  F.  Terms  Any 
Shipping  Route  May  Be  Taken  If  Not  Otherwise  Specified — 

A,  a  Pacific  Coast  importer,  sold  B,  a  San  Francisco  merchant,  a 
quantity  of  No.  1  Saigon  Long  Rice,  C.  I.  F.  Havana,  Cuba,  January- 
February  shipment  from  Hongkong.  February  17th  Buyer  asked 
the  Seller  to  declare  the  name  of  steamer  and  date  of  shipment,  the 
Seller,  in  turn,  asking  his  supplier  for  the  information.  April  5th  Buyer 
wrote  Seller  that  it  was  imperatively  necessary  that  he  have  immediate 
advice  as  to  shipment,  and  Seller  replied  as  follows:  Our  supplier  has 
notified  us  that  this  Rice  is  afloat  on  the  S.  S.  "Toyo  Maru,11  which  sailed 
late  in  February  from  the  Orient.  April  27th  Seller  informed  Buyer  that 
his  supplier  advised  that  the  rice  had  been  shipped  per  the  S.  S.  "Hague 
Maru". 

Buyer  refused  to  accept  the  documents  on  presentation,  claiming 
that  the  Seller,  having  declared  the  steamer,  could  not  thereafter  tender 
goods  carried  by  another  vessel,  except  with  Buyer's  consent,  or  if  due 
to  force  majeure,  compelling  the  transfer  of  the  goods  from  the  declared 
vessel  to  another,  which  the  Seller  had  not.  urged  as  a  reason  for  the 
substitution.  Buyer  also  contended  that  the  delivering  carrier  was 
routed  via  the  Suez  Canal,  thereby  causing  delay  in  receipt  of  goods. 
Seller  claimed  that  under  date  of  April  9th  he  had  written  Buyer  that 
the  advice  of  the  5th  had  been  received  by  telephone  and  was  subject  to 
correction,  and  that  on  the  10th  he  had  declared  the  S.  S.  "Hague 
Maru".    Seller  denied  having  received  either  communication. 


100  COMMERCIAL   ARBITRATION 

Held,  That  the  evidence  submitted,  in  the  form  of  affidavits,  being 
contradictory,  it  is  necessary  for  the  arbitrators  to  fall  back  upon  the 
terms  of  the  contract.  This  was  a  C.  I.  F.  sale,  and  as  the  contract  does 
not  provide  for  shipment  via  any  route  or  vessel,  documents  conforming 
strictly  to  the  terms  of  the  contract  are  a  proper  tender  thereunder,  and 
Buyer  shall  accept  delivery.  (Rice  Association  of  California  Arbitration 
No.   9,    1920). 

No  Obligation  on  Seller  to  Declare  Vessel — Seller  Not  Re- 
quired to  Make  Direct  Purchase  From  Abroad — Kind  of  Con- 
tainer Specified  Must  Be  Supplied — A  and  B  contracted  under 
date  of  July  23,  1919,  for  one  hundred  tons  of  Soya  Bean  Oil, 
August  shipment  from  the  Orient,  San  Francisco  delivery,  ex  dock 
Breck  Mitchell,  Inc.,  plant,  San  Francisco,  net  cash  upon  receipt  of 
documents.  The  contract  also  bore  the  following  notations:  "Barrels 
to  be  recoopered  and  put  in  first  class  salable  condition  after  arrival  in 
San  Francisco" ;  "Public  Weigher's  Certificate  to  govern  after  recooperage 
of  barrels".    "Fir  and  oak  barrels  mixed" 

August  shipment  from  the  Orient  was  specified  and  shipment  was 
made  on  or  about  August  11th,  from  the  Orient.  On  August  29,  1919, 
Buyer  requested  Seller  to  declare  date  of  bill  of  lading.  Seller,  however, 
did  not  then  or  subsequently  name  date  of  shipment  or  vessel.  On  or 
about  September  8th,  the  oil  having  arrived  at  Seattle,  Seller,  appar- 
ently without  then  naming  importing  steamer  to  Buyer,  informed 
Buyer  of  the  arrival  of  the  oil  at  Seattle,  and  Buyer  at  that  time  took 
up  with  Seller  the  question  of  an  allowance  in  price  if  Buyer  would 
accept  shipment  at  Seattle  instead  of  San  Francisco.  Buyer  finally 
decided  to  allow  shipment  to  come  forward  to  San  Francisco. 

Buyer  refused  to  accept  tender  at  Breck-Mitchell  Inc.,  plant, 
San  Francisco,  on  October  6,  1919,  and  sought  to  have  his  rejection 
sustained  by  arbitration  on  the  following  specific  grounds: 

First.     Because  the  oil  was  never  purchased  by  Seller  in  the  Orient. 

Second.  Because  the  Seller  refused  and  neglected  within  a  reason- 
able time,  in  accordance  with  the  custom  of  the  trade,  to  name  the 
vessel  and  date  of  shipment  to  Buyer. 

Third.  Because  the  delivery  was  not  tendered  in  mixed  fir  and 
oak  barrels. 

While  the  Buyer  did  not  base  his  rejection  thereon,  he  mentioned 
that  the  delivery  order  was  tendered  without  weight  certificate  and 
invoice  although  the  contract  specified  "Payment  net  cash  upon 
receipt  of  documents." 


REPORTS  101 

Buyer  did  not  contend  that  the  oil  was  not  shipped  from  the  Orient 
during  August,  but  did  hold  that  the  Seller  did  not  purchase  it  in  the 
Orient  and  that  the  steamer's  manifest  did  not  show  Seller  as  a  con- 
signee. 

Held,  First.  That  Seller  in  good  faith  purchased  this  oil  for  August 
shipment  from  the  Orient  and  it  was  so  shipped.  There  was  nothing 
in  the  contract  preventing  the  Seller  from  buying  this  oil  from  Pacific 
Coast  Sellers,  so  long  as  the  oil  was  August  shipment  oil. 

Second.  That  no  obligation  either  under  the  contract  or  by  cus- 
tom of  trade  rested  upon  Seller  to  declare  to  Buyer  date  of  shipment, 
or  name  of  steamer  prior  to  tender  of  the  oil. 

Third.  That  Seller's  failure  to  tender  in  mixed  fir  and  oak  barrels 
would  not  justify  a  rejection  of  the  goods.  Buyer  would  be  entitled  to 
require  Seller  to  recooper  into  oak  barrels  approximately  50  per  cent 
of  the  oil,  or  Buyer  could  require  an  allowance  on  all  fir  barrels  over 
50  per  cent  of  the  number  of  barrels  delivered,  such  allowance  to 
represent  the  market  difference  in  value  between  Soya  Bean  Oil  in  oak 
barrels  and  Soya  Bean  Oil  in  fir  barrels. 

Fourth.  That  while  Buyer  does  not  claim  that  failure  to  tender 
weight  certificate  and  invoice  is  ground  for  rejection,  arbitrators  feel 
that  since  Buyer  has  raised  this  point  in  an  indirect  way,  arbitrators 
should  and  do  hereby  find  that  the  tender  of  a  delivery  order  is  a  good 
tender,  as  neither  the  weight  certificate  nor  the  invoice  would  be 
prepared  in  the  ordinary  course  of  trade  until  the  oil  was  weighed  and 
delivered. 

Fifth.  That  Buyer  is  bound  to  take  delivery  of  shipment  in  accord- 
ance with  contract  terms.  Furthermore  the  Buyer  shall  pay  all  the 
expenses  of  storage,  insurance,  and  interest  or  other  loss  the  seller 
may  have  been  put  to  as  the  result  of  the  Buyers  not  accepting  delivery 
when  tender  was  made.  (Foreign  Commerce  Association  Abritation 
No.  5,  1919.) 


REPORTS  103 


Delivery,  Time  of 


Reasonable  Time  of  Delivery  Implied — The  general  rule  as  to 
sales  of  merchandise  is  that  where  no  time  of  delivery  is  specified 
delivery  must  be  within  a  reasonable  time. 

The  general  rule  is  that  exception  as  to  quality  of  goods  delivered 
must  be  made  at  the  time  of  delivery  and  not  after  acceptance  and 
removal  of  the  goods  from  the  place  where  inspection  should  have  been 
made. 

Effect  of  Force  Majeure — Where  delay  has  resulted  from  mishap 
to  vessel,  or  other  causes  beyond  Seller's  control,  rejection  for  delay 
in  delivery  will  not  be  sustained  under  a  contract  containing  what  is 
commonly  described  as  a  "casualty"  clause.  (Importers  and  Exporters 
Association  Arbitration  No.  1,  1918,  Page  105;  Importers  and  Exporters 
Association  Arbitration  No.  6,  1919,  Page  106). 

Under  a  C.  I.  F.  Seattle  contract  Buyer  actually  took  delivery  of  a 
quantity  of  Peanuts  and  caused  them  to  be  removed  from  the  dock, 
subsequently  objecting  to  the  quality.  Buyer's  action  in  taking  delivery 
without  protest  was  in  itself  an  acceptance.  (Foreign  Commerce 
Association  Arbitration  No.  14,  1920,  Page  193). 

Delay  in  delivery  of  imported  Beans  when  requested  or  acquiesced 
in  by  Buyer  at  time  of  original  tender  will  not  warrant  a  rejection, 
notwithstanding  that  delivery  was  not  effected  until  October  25,  1918, 
although  goods  had  arrived  at  Seattle  April  3,  1918.  (California  Bean 
Dealers  Association  Arbitration  No.  17,  1918,  Page  103). 

When  Delivery  Is  Delayed  by  Buyer's  Request — A  sold  to  B 
a  quantity  of  Maruzura  Beans,  C.  I.  F.  Seattle  and/or  San  Fran- 
cisco delivery,  in  bond,  the  contract  being  dated  November  30,  1917. 
Fifteen  hundred  (1,500)  bags  of  beans  applying  on  this  contract  arrived 
in  Seattle  on  the  " Borneo  Maru"  some  time  just  prior  to  April  3,  1918. 
On  or  about  May  2,  1918,  Seller  transmitted  to  Buyer  two  (2)  delivery 
orders  on  his  Seattle  branch  numbered,  respectively,  157  for  1,000  bags, 
158  for  500  bags. 

These  orders  were  transmitted  by  the  Buyer  to  the  Seller's  Seattle 
house  with  instructions  to  deliver  to  another  company  the  one 
thousand  (1,000)  bags,  and  requested  Seller  to  hold  the  five  hundred 
(500)  bags  covered  by  order  No.  158  for  Buyer's  account,  and  ad- 
vise as  to  where  stored.  It  may  be  noted  that  prior  to  this  time, 
on  or  about  April  4th,  Buyer  had  requested  that  samples  of  these 


104  COMMERCIAL   ARBITRATION 

beans  be  sent  to  the  San  Francisco  Chamber  of  Commerce,  which  was 
done;  it  also  appears  that  owing  to  general  freight  congestion  at  Seattle, 
the  goods  were  not  moved  to  storage  until  June  4th.  Between  the 
time  that  Buyer  sent  his  delivery  orders  and  his  letter  to  the  Seattle 
office  of  Seller,  dated  July  3rd,  there  was  certain  correspondence  relative 
to  weight  certificate,  but  there  appears  no  record  of  any  anxiety  on 
the  part  of  Buyer  in  connection  with  the  five  hundred  (500)  bags 
represented  by  order  No.  158.  On  the  contrary,  in  his  letter  dated 
July  3rd,  Buyer  said:  "We  are  in  no  hurry  for  the  other  five  hundred 
(500)  bags,  and  will  give  you  shipping  instructions  later." 

The  question  to  be  determined  was  whether  Seller  made  a  good 
delivery  of  the  five  hundred  (500)  bags  paid  for  by  Buyer,  which 
Buyer  charged  back  to  Seller,  claiming  that  no  proper  delivery  was 
made,  and  the  conclusions  of  the  arbitrators  thereon  were  as  follows: 

"That  at  the  time  that  Seller  gave  the  two  delivery  orders  on 
its  Seattle  house  for  fifteen  hundred  (1,500)  bags,  as  per  Buyer's  in- 
structions, and  Buyer  accepted  these  orders,  sent  them  to  Seattle, 
and  requested  the  Seattle  house  to  ship  the  one  thousand  (1,000) 
bags  to  another  company,  and  to  hold  the  other  five  hundred  (500) 
bags  in  the  same  relative  position  as  the  one  thousand  (1,000)  bags 
upon  which  delivery  was  made  in  accordance  with  the  instructions. 
It  also  appears  from  the  telegram  sent  by  Buyer  to  Seller  at  Seattle, 
under  date  of  July  31st,  reading  as  follows: 

"Referring  weight  certificate  July  13th  beans  marked  G  ten  T 
from  yourselves  two  hundred  twenty-six  sacks,  one  hundred  fifty-nine 
sacks,  one  hundred  twenty  sacks,  total  five  hundred  five  ex  'Borneo 
Maru';  wire  quick  disposition  if  not  shipped,  what  warehouse  stored, " 
and  Seller's  reply  under  date  of  August  1,  1918: 

"Your  wire  yesterday  five  hundred  five  sacks  beans  G  ten  T  in 
Winn  and  Russell  warehouse," 

clearly  indicated  from  Seller's  use  of  the  words  "if  not  shipped"  that 
he  had  lost  track,  during  the  intermediate  period,  of  these  beans;  also 
that  nothing  further  was  said  or  done  about  them  for  nearly  three 
months,  when  Buyer,  in  his  letter  dated  October  25,  1918,  addressed 
Seller  at  San  Francisco,  saying  in  part  "in  endeavoring  to  obtain 
negotiable  warehouse  receipt  for  these  five  hundred  (500)  bags  of 
beans  we  find  that  they  are  not  held  for  our  account.  We  call  your 
attention  to  telegram  received  from  warehousemen,  dated  August  16th, 
as  follows: 

'  "Have  no  record  of  five  hundred  five  bags  of  beans  marked  G  ten 
T  in  your  name.' 


REPORTS  105 

"From  the  foregoing  it  would  appear  that,  after  receiving  word, 
under  date  of  August  1st,  that  the  beans  were  stored  in  warehouse, 
Buyer  paid  no  further  attention  thereto  until  about  October  16th, 
and  the  arbitrators  feel  that  Buyer  did  not  show  due  diligence  in  the 
matter,  in  view  of  the  fact  that  he  had  accepted  an  order  on  the  Seattle 
house  for  the  five  hundred  (500)  sacks,  turned  the  order  over  to  the 
Seattle  house,  with  instructions  to  hold  the  same  for  his  account,  paid 
for  the  goods,  and  then  failed,  for  a  period  of  nearly  three  months, 
to  follow  up  the  transaction  and  obtain  his  negotiable  warehouse 
receipt,  which  could  have  been  delivered  by  Seller  at  any  time  during 
this  period.  On  certain  other  contentions  set  up  by  Buyer,  particularly 
on  the  point  that,  although  the  contract  is  ostensibly  a  C.  I.  F.  contract, 
no  documents  or  insurance  policy  were  delivered,  the  arbitrators  find 
that  the  contract  specifically  states  that  terms  are  cash  against  delivery 
order.  Deliveries  were  tendered  by  Buyer  to  Seller,  and  acceptance 
of  same  was  signified  by  the  payment  of  invoice  covering  quantity  of 
beans  involved.  This  completed  the  transaction  as  far  as  Seller  was 
concerned. 

"Should  the  Buyer  have  encountered  any  difficulty  in  securing  the 
delivery  of  the  beans  covered  by  these  delivery  orders,  arbitrators 
consider  that  immediate  demands  should  have  been  made  direct  to 
Seller. 

"Referring  to  Buyer's  claim  that  no  specific  delivery  was  made 
of  the  five  hundred  five  (505)  sacks  at  any  time  during  the  controversy, 
it  will  be  noted  that  contract  reads  Seller  has  the  option  of  delivering 
5  per  cent  more  or  less  and  considering  these  features  in  conjunction 
with  the  conditions  at  Seattle,  it  is  deemed  that  the  strength  of  this 
claim  is  entirely  eliminated. 

"Whatever  responsibility  Seller  assumed  after  acceptance  by  Buyer 
of  the  delivery  order  for  the  five  hundred  five  (505)  sacks  and  its  re- 
delivery to  the  Seattle  house,  was  a  matter  of  accommodation  and 
not  a  part  of  the  original  transaction.  The  arbitrators  are  unanimous 
in  feeling  that  the  Buyer  did  not  show  due  diligence  in  obtaining  the 
negotiable  warehouse  receipt  from  the  Seller,  and,  therefore,  the  de- 
livery being  a  good  delivery  under  the  contract,  Buyer  is  not  entitled 
to  a  return  of  his  purchase  price.  (California  Bean  Dealers  Association 
Arbitration  No.  17,  1918). 

Notice  of  Arrival  Customary  but  Failure  to  Give  Is  Not 
Ground  for  Rejection — A,  Seller,  and  B,  Buyer,  contracted  for  one 
hundred  (100)  tons  Chinese  ungraded  Peanuts,  ex  dock  Pacific  Coast 
Port,  subject  to  inspection  and  acceptance  on  arrival,  shipment  from 


106  COMMERCIAL   ARBITRATION 

the  Orient  during  April-May- June.  Buyer  rejected,  claiming  that 
Seller  did  not  give  notice  of  arrival  of  the  goods  at  Seattle  until  several 
weeks  had  passed.  Seller  contended  that  he  did  notify  Buyer  as  soon 
as  the  goods  were  cleared  and  ready  for  inspection. 

Held,  Although  the  arbitrators  do  not  exonerate  Seller  of  his 
failure  to  promptly  notify  Buyer,  as  they  firmly  believe  it  is  a  trade 
custom  to  notify  the  Buyer  of  the  arrival  of  goods  and  any  difficulty 
in  clearing,  they  nevertheless  feel  that  the  contract  is  still  in  force 
and  that  the  Buyer  shall  make  immediate  examination  of  the  goods 
and  if  in  his  opinion  the  quality  is  up  to  contract  requirements  he  shall 
accept  same,  otherwise  the  question  of  quality  shall  be  referred  to 
arbitration.  (Importers  and  Exporters  Association  Arbitration  No.  1, 
1918). 

Force  Majeure  Affecting  Time  of  Delivery — Rejection  After 
Acceptance — A  contracted  with  B  and  B  with  C  for  the  sale  and 
purchase  of  four  hundred  (400)  tons  Japanese  and/or  Korean  Kotenashi 
Beans,  H.  P.,  F.  A.  Q.  Season  of  1918,  in  bond,  ex  wharf  Pacific 
Coast,  July-August  shipment  from  the  Orient.  Deliveries  of  three 
hundred  thirty  (330)  tons  were  effected  against  the  contracts,  the 
remainder,  seventy  (70)  tons,  being  refused  by  B  and  by  C  alleging 
delivery  was  delayed  unduly. 

Tender  of  delivery  order  covering  seventy  (70)  tons  (the  remainder 
of  the  quantity)  was  made  to  B  on  September  10,  1919,  which  order 
was  returned  to  Seller  with  the  request  that  B  be  furnished  with 
certificate  of  inspection  and  samples  of  the  goods.  The  contract  called 
for  payment  net  cash  in  exchange  for  delivery  order,  and  there  is  no 
mention  of  a  certificate  of  inspection  nor  was  Seller  obliged  to  furnish 
sample  of  goods.  Nevertheless,  Seller  did  undertake  to  obtain  such 
certificate  and  samples,  and  on  October  25,  1919,  did  tender  these 
documents,  having  been  delayed  in  fulfilling  B's  request  by  reason  of 
the  fact  that  the  "Shinbu  Maru,"  on  which  the  goods  arrived  at  Seattle, 
had  run  aground,  had  been  towed  to  port,  her  cargo  discharged  in  a 
disorderly  manner  and  after  discharge  was  under  the  control  of  survey- 
ors. Clause  4  of  the  contract  provided :  Delay  in  time  of  shipment 
or  delivery  caused  by  *  *  *  perils  of  the  sea,  or  any  other  cause 
beyond  the  control  of  the  Seller,  does  not  constitute  cause  for  rejection  of 
goods  by  Buyer.  Also,  there  arose  other  contingencies  beyond  Seller's 
control. 

Held,  That  Seller  A  made  shipment  from  the  Orient  well  within 
contract  period,  and  that  he  tendered  delivery  order  as  soon  as  prac- 
tically possible,  i.  e.,  September  10,  1919,  and  that  Buyer  B,  for  a  period 


REPORTS  107 

exceeding  one  month,  accepted  this  tender  in  fulfillment  of  contract, 
and  that  Buyer  B  should  take  delivery. 

As  to  the  dispute  between  B  and  C,  the  conditions  were  identical 
and  the  contracts  were  the  same  except  as  to  the  payment  clause,  which 
indicated  to  the  arbitrators  that  C  did  not  desire  early  shipment  from 
the  Orient,  as  September  15,  1919,  is  provided  as  the  earliest  payment 
date. 

Held,  That  B  made  shipment  from  the  Orient  well  within  contract 
period  and  while  delivery  may  have  been  delayed  owing  to  mishap  to 
vessel,  such  contingency  was  specifically  covered  in  the  contract. 
Tender  was  not  thereafter  unduly  delayed  and  all  the  material  con- 
ditions of  the  contract  were  fulfilled.  C  was  directed  to  take  delivery 
of  the  goods.  (Importers  and  Exporters  Association  Arbitration  No.  6, 
1918.  Affirmed  on  Appeal,  Importers  and  Exporters  Association 
Arbitration  No.  6A,  1918). 


REPORTS  109 


Demurrage 


Shortage  in  rail  equipment  whereby  a  charterer  is  prevented  from 
unloading  the  cargo  on  cars  will  not  relieve  charterer  of  responsibility 
for  demurrage  on  vessel.  (San  Francisco  Chamber  of  Commerce 
Arbitration,  1920,  Page  222). 

Presence  of  Ice  Preventing  Movement  of  Barge  with  Lumber 
for  Vessel's  Cargo — A  Contingency  Beyond  Shipper's  Control — 
Necessity  to  Trim  Vessel — The  owner  of  a  vessel  claimed  demurrage 
in  the  sum  of  $3478  with  interest,  for  delay  of  the  vessel  while  loading 
a  cargo  of  lumber  at  Pacific  ports,  the  Owner  contending  that  the  delay 
was  due  to  the  Shipper. 

It  was  not  shown  that  there  was  a  lack  of  lumber  for  the  vessel 
at  any  of  the  loading  ports,  except  at  St.  Helens,  where  the  lumber 
intended  for  No.  5  hatch  of  the  vessel  was  not  alongside,  but  it  was  in 
evidence  that  this  lumber  was  cut  and  loaded  on  a  barge  to  be  placed 
alongside  No.  5  hatch  but  was  prevented  by  ice,  due  to  the  cold  snap, 
from  moving  to  the  loading  point,  and  the  Arbitrators  considered  this 
condition  clearly  beyond  the  control  of  the  Shipper. 

It  was  not  shown  that  the  vessel  was  in  a  condition,  under 
prevailing  weather  conditions,  to  load  an  average  of  300,000  feet  per 
day.  This  was  further  evidenced  by  the  fact  that  at  the  Hammond 
Mill,  the  last  loading  port,  where  more  lumber  was  ready  at  the  dock 
than  could  be  loaded,  and  where  no  sorting  of  lumber  was  required,  the 
vessel  did  not  load  the  required  300,000  feet  per  day,  except  on  two 
days,  even  when  loading  on  deck. 

While  the  sorting  of  lumber  at  Knappton  Mill  would  require  some 
extra  handling,  the  Arbitrators  expressed  the  opinion  that  this  caused 
any  appreciable  delay  in  loading,  when  the  amount  loaded  there  per 
gang  is  compared  with  the  amount  loaded  at  other  points  where  no 
sorting  was  required. 

It  was  shown  that  the  capacity  of  the  vessel  was  over-estimated  by 
its  Owners  and  that  at  the  last  loading  port  it  was  necessary  to  reduce 
the  number  of  gangs  and  slow  down  the  loading  in  order  to  bring  vessel 
to  trim. 

Held,  That  Shipper  is  not  liable  for  demurrage  claimed  by  the 
Owner.     (San  Francisco  Chamber  of  Commerce  Arbitration,  1921.) 


110  COMMERCIAL   ARBITRATION 

Demurrage  for  Non-Completion  of  Vessel  in  Contract  Time 
— Excusable  Delay — Necessity  of  Clearance  Papers  from  U.  S. 
Shipping  Board — A  Norway  shipowner  contracted  with  an  American 
shipbuilder  to  construct  a  steel  freight  steamer.  The  contract  provided 
that  the  vessel  was  to  be  completed  and  delivered  to  the  owner's  agents 
on  or  before  February  20,  1917,  and  if  not  delivered  on  or  before  that 
date,  or  within  the  period  to  which  the  time  for  delivery  may  be 
extended  under  certain  provisions  of  the  contract,  for  each  day  the 
time  was  exceeded  until  the  completion  and  delivery  of  said  steamer, 
the  builder  should  pay  a  penalty  of  $1,000  to  the  owner,  and  for  every 
day  the  vessel  shall  be  completed  and  delivered  before  said  date  or 
any  permissible  extensions  thereof,  the  owner  should  pay  the  builder 
the  sum  of  $1,000  as  a  premium,  provided  that  said  premiums  should 
not  be  for  more  than  30  days  if  extensions  of  time  for  delivery  in  the 
aggregate  should  exceed  thirty  days. 

Delivery  of  the  vessel  was  made  upon  March  22,  1917,  although  it 
was  in  evidence  that  delivery  was  tendered  by  builder  upon  March  16, 
1917,  upon  payment  by  owner  of  balance  due,  and  owner  claimed 
thirty  days  demurrage  at  $1,000  per  day  under  the  terms  of  the  contract, 
as  liquidated  damages  for  delay  in  delivery. 

The  builder  denied  owner's  claim  for  any  damages  on  the  grounds 
of  excusable  and  permissible  delay  in  the  construction  of  the  vessel, 
amounting,  as  claimed,  to  more  than  the  delay  in  delivery. 

It  was  in  evidence  that  four  days'  delay  was  caused  by  a  strike 
at  builder's  plant  and  that  due  notice  thereof  was  given  by  builder  to 
owner.  The  arbitrators  found  that  builder  was  thereby  entitled  to 
four  days'  extension  of  time  for  delivery,  under  the  terms  of  the 
contract,  thus  making  the  then  delivery  date  February  24,  1917. 

It  was  in  evidence  that  the  seven  days'  delay  upon  the  part  of  the 
owner  in  making  final  payment  and  taking  delivery  upon  March  16, 
1917,  when  builder  notified  owner's  agents  that  vessel  would  be  ready 
for  delivery  March  16th,  was  due  to  delay  in  securing  from  the  United 
States  Shipping  Board  the  necessary  clearance  papers,  and  it  was 
admitted  that  this  seven  days'  delay  was  beyond  the  control  of  either 
party.  The  arbitrators  decided  that  the  actual  date  of  delivery  to  which 
any  penalty  for  delay  should  be  reckoned  was  March  16,  1917,  and  as 
the  contract  delivery  time  was  extended  to  February  24th,  on  account 
of  strike,  this  left  19  days  actual  delay  in  delivery  of  the  vessel  to  be 
considered  in  connection  with  owner's  claim  for  demurrage.  The 
arbitrators,  in  discussing  the  matter,  said: 


REPORTS  111 

"We  have  given  very  careful  consideration  to  the  statements  and 
other  documents  submitted  by  both  parties  in  this  case  and  have 
taken  more  time  than  usual  in  studying  and  weighing  the  details  of 
the  evidence  submitted  in  connection  with  claims  made  for  and  against 
excusable  and  permissible  delays  upon  the  part  of  the  builder  and 
whether  such  delay  or  part  thereof  was  actually  beyond  builders' 
control. 

"The  committee  has  taken  into  consideration  the  fact  that  at  the 
time  of  the  builder's  entry  into  the  contract  with  the  owner  on  August 
23,  1916,  he  had  thorough  knowledge  of  the  serious  delay  already 
occasioned  at  that  time,  amounting  to  more  than  a  quarter  of  a  year,  in 
the  shipment  of  the  plates  from  the  mills. 

"We  believe  it  was  his  duty  to  have  imparted  this  knowledge  to  the 
owner,  so  that  he  might  have  the  privilege  of  entering  into  the  contract 
or  declining  to  do  so,  as  it  is  possible  that  this  would  have  influenced 
him,  and  at  any  rate  he  was  entitled  to  know  the  full  status  of  the  case 
at  the  time  the  contract  was  entered  into. 

"To  emphasize  this  further,  and  showing  that  the  builder  himself 
was  disturbed  by  the  great  delay  occasioned  up  to  that  time  on  August 
23,  1916,  being  the  very  day  on  which  the  contract  was  signed,  he 
telegraphed  to  his  representative  in  the  East,  calling  attention  to  the 
serious  delay  in  the  shipment  of  plates  from  the  mills  and  asking  him 
to  call  the  matter  to ,  the  attention  of  the  Steel  Mill  and  ask  its 
assistance  in  solving  the  difficulty.  We  also  take  into  consideration 
the  fact  that  as  testified  by  the  builder's  representative,  and  also 
by  letters  in  evidence,  the  delay  in  shipment  of  the  plates  was  partly 
occasioned  by  the  Steel  Mill  having  oversold  its  output.  The  oversold 
condition  of  any  merchandise  could  not  by  any  stretch  of  the  imagina- 
tion be  considered  a  cause  beyond  the  control  of  the  Seller. 

"The  committee,  however,  finds  that  subsequent  to  August  23,  1916, 
the  builder  used  every  diligence  and  made  every  effort  to  expedite  the 
shipment  of  the  plates  and  went  even  further  by  substituting  for  this 
vessel,  plates  intended  for  sister  ships  which  had  been  planned  and 
whose  plates  had  been  ordered  previously. 

"Under  these  circumstances,  while  they  consider  the  builder  is 
responsible  for  any  delays  prior  to  August  23,  1916,  the  committee  does 
consider  that  they  could  only  render  substantial  justice  by  relieving  the 
builder  of  any  delays  subsequent  to  that  delay  believing  that  it  was 
entirely  beyond  his  control.  Therefore,  it  remains  only  for  the  com- 
mittee to  find  the  measure  of  damages  and  we  fix  said  damages  at  the 


112  COMMERCIAL   ARBITRATION 

sum  of  $7,600  and  we  decide  that  the  builder  shall  pay  to  the  owner 
as  liquidated  damages  for  demurrage  the  sum  of  $7,600,  and  that  said 
payment  when  made  shall  constitute  full  settlement  of  all  claims  in 
this  case. 

"The .  committee  has  considered  the  point  made  by  the  builder 
that  he  was  entitled  to  an  extension  by  reason  of  the  delay  in  certain 
partial  payments  according  to  the  contract,  but  we  find  that  as  shown 
by  the  evidence  placed  before  us  the  builder  was  not  delayed  in  the 
construction  of  the  vessel  nor  in  any  other  way  injured  by  those  delays 
and  do  not  consider,  under  the  wording  of  the  contract,  that  the 
builder  is  entitled  to  any  allowance  of  time  on  account  of  said  delays. 
(San  Francisco  Chamber  of  Commerce  Arbitration,  1920). 


D 


REPORTS  1 13 


lversion 


The  general  rule  on  F.  O.  B.  cars  Pacific  Coast  contracts  is  that  the 
Buyer  has  the  right  of  diversion. 

On  sales  made  F.  O.  B.  cars  Port  of  Entry,  Seller  has  option  of 
selecting  initial  line  (except  in  case  of  Buyer's  tank  cars),  but  shall, 
when  possible,  recognize  routing  named  by  Buyer.  When  goods  are 
sold  delivered,  Seller  shall  have  option  of  selecting  entire  route.  When 
goods  are  sold  F.  0.  B.  Port  of  Entry  for  trans-shipment  by  all-rail, 
rail  and  water  or  all-water,  and  after  arrival  at  Port  of  Entry  it  be 
impossible  to  observe  Buj-er's  routing  instructions  by  reason  or  inability 
of  railroad  to  furnish  equipment,  or  if  shipment  is  refused  by  carrier 
on  account  of  strike,  railroad  embargo  or  governmental  regulations  or 
inability  to  obtain  vessel  space,  Seller  shall  notify  Buyer,  and  in  the 
absence  of  immediate  instructions  to  ship  by  another  open  route,  or 
to  store  goods  for  Buyer's  account,  Seller  shall  be  privileged  to  ship 
by  any  open  route  at  equivalent  freight  rate.  (Foreign  Commerce 
Association  Rule  No.  22). 

Termination  of  Sellers  Responsibility — The  general  rule  is 
that,  notwithstanding  shipped  to  Seller's  order,  goods  sold  F.  O.  B. 
cars  or  F.  0.  B.  vessel  for  transhipment  from  Port  of  Entry,  or  F.  O.  B. 
vessel  from  domestic  port,  are  at  risk  of  Buyer  from  and  after  delivery 
to  carrier  and  upon  issuance  by  carrier  of  bill  of  lading  or  shipping 
receipt.  (Foreign  Commerce  Association  Rule  No.  26;  Dried  Fruit 
Association  of  California,  Canners  League  of  California  and  California 
Bean  Dealers  Association  Uniform  Contract  Provisions). 

When  Buyer  requests  Seller  to  divert  shipments,  or  to  perform 
other  accommodations  not  provided  for  in  contract,  Seller  shall  not 
be  responsible  for  any  error  made  in  carrying  out  Buyer's  instructions. 
In  undertaking  such  accommodations  for  account  of  Buyer,  Seller 
is  merely  acting  as  agent  without  compromising  Seller's  rights  under 
contract.  Seller  shall  be  privileged  to  make  delivery  by  presentation 
of  exchange  bill  of  lading  provided  same  shows  that  original  bill  of 
lading  was  dated  within  contract  time.  (Foreign  Commerce  Association 
Rule  No.  27). 

If  Buyer  delays  his  request  for  diversion  beyond  the  time  when  it 
may  be  attempted  or  effected  by  Seller  using  due  diligence,  Seller 
cannot  be  expected  to  perform  the  impossible.  (Foreign  Commerce 
Association  Arbitration  No.  25,  1920,  Page  52). 


1  14.  COMMEKCIAL   ARBITRATION 

If  Seller  erroneously  ships  to  destination  other  than  that  named  by 
Buyer,  he  is  absolved  of  blame  for  loss  because  of  market  depreciation 
and  additional  freight,  by  a  showing  that  he  immediately  requested 
carrier  to  divert  to  correct  destination  and  obtained  a  new  bill  of 
lading  to  such  destination.  (California  Bean  Dealers  Association 
Arbitration  No.  12,  1920,  Page  114). 

Failure  on  the  part  of  a  carrier  to  effect  diversion  requested  by 
Seller  is  not  chargeable  to  Seller  and  he  is  not  responsible  for  either 
filing  or  collecting  claim  against  the  carrier.  (California  Bean  Dealers 
Association  Arbitration  No.  12,  1920,  Page  114). 

Seller  Not  Responsible  for  Carrier's  Error — Failure  to  Effect 
Diversion — Discovery  of  Mistake — Buyer's  Diversion  Right  Pre- 
supposed— A  sold  to  B  a  given  quantity  of  Choice  Recleaned  Lima 
Beans,  F.  O.  B.,  California  shipping  point.  Buyer  made  claim  for 
damages  in  the  sum  of  $4,875.87  alleged  to  have  been  sustained  by 
reason  of  Seller's  failure  to  ship  the  goods  to  a  proper  destination. 
Buyer  gave  Seller  instructions  to  ship  the  goods  to  a  named  destination, 
but  the  goods  were  consigned  erroneously  to  New  York  City  by  the 
Seller.  Immediately  upon  receipt  of  the  original  bills  of  lading,  Seller 
discovered  the  error  in  destination  and  promptly  applied  to  carrier 
for  new  bills  of  lading  covering  diversion  to  the  proper  destination, 
originally  instructed  by  Buyer.  The  carrier  promptly  issued  new  bills 
of  lading.  The  record  showed  that  the  carrier  did  not  effect  diversion 
at  proper  destination,  but  delivered  one  car  at  Albany,  New  York, 
and  another  car  at  New  York  City. 

Buyer  claimed  that  because  of  the  unusual  delay  in  delivery,  and 
the  market  decline,  together  with  extra  freight  charges  of  $420.06, 
which  he  was  assessed,  he  was  damaged  in  the  sum  of  $4,875.87,  and 
that  he  would  not  have  sustained  such  loss  had  Seller  followed  instruc- 
tions to  make  shipment  to  proper  destination. 

The  record  showed  that  the  new  bills  of  lading  covering  the  diversion 
were  requested  by  Seller  under  date  of  August  5,  1920,  and  issued  by 
carrier  August  6,  1920.      Shipment  was  made  August  4,  1920. 

Held,  That  the  error  had  been  promptly  discovered  and  immediately 
corrected  by  Seller  and  Buyer  was  in  no  way  damaged  thereby.  On 
the  contrary,  Seller  used  due  diligence  immediately  to  correct  the 
error  before  the  cars  had  reached  either  the  correct  or  erroneous  des- 
tination. The  right  of  diversion  pre-supposed  on  F.  O.  B.  cars  Pacific 
Coast  contracts,  does  not  enter  into  consideration  herein,  since  Buyer 
did  not  desire  a  diversion  to  any  other  point  than  the  original  designated 


REPORTS  115 

by  him,  although  Seller  offered  to  pay  any  additional  expense  in  the 
event  another  diversion  were  desired.  The  railroad  company  furnished 
bills  of  lading  to  Seller  for  the  proper  destination,  and,  as  far  as  Seller 
was  concerned,  had  the  railroad  carried  out  his  diversion  instructions, 
which  the  carrier  was  obligated  to  do  on  furnishing  the  bills  of  lading, 
there  would  have  been  no  delay  in  goods  reaching  destination.  Buyer 
very  properly  accepted  the  bills  of  lading  showing  that  diversion  had 
been  requested  and  that  proper  destination  was  prescribed  for  the 
shipments.  Neither  the  Buyer  nor  the  Seller  could  do  more  than  this, 
and  even  though  the  goods  had  been  intentionally  shipped  to  another 
point  and  subsequently  diverted  to  the  required  destination,  the  Seller 
would  have  fulfilled  his  obligations  as  to  an  F.  O.  B.  California  point 
shipment.  Seller  furnished  proper  shipping  documents  to  Buyer,  and 
any  failure  of  delivery  within  the  usual  time  or  at  the  proper  place  is 
entirely  the  responsibility  of  the  carrier,  and  Buyer  should  look  to 
the  carrier  for  any  damages  arising  from  non-fulfillment  of  its  bill  of 
lading  obligations. 

Buyer  demanded  that  Seller  file  the  claim  against  the  carrier  for 
his  own  account. 

Held,  As  a  matter  of  courtesy,  we  request  that  Seller  accord  Buyer 
every  possible  assistance  in  making  and  pressing  his  claim  against  the 
carrier,  but  there  is  no  legal  obligation  on  the  part  of  the  Seller  to  file 
such  claim.  (California  Bean  Dealers  Association  Arbitration  No.  12, 
1920). 


REPORTS  117 


Effect  of  War  on  Contracts 

Act  of  Government — Effect  on  Contract  for  Goods  to  Be 
Manufactured — Express  Limitation  as  to  Export  License  and 
Priority  Permit — Cancellation  Not  Allowed — An  exporter  placed 
an  order  with  a  steel  manufacturer  for  fifty  tons  of  Galvanized  Barbed 
Wire,  F.  0.  B.  Pittsburgh  District  for  shipment  to  Calcutta,  India. 
The  sale  and  purchase  were  made  September  5,  1918,  during  the  world 
war.  Shipment  was  to  be  made  "as  soon  as  possible  from  mill,  subject 
to  receipt  of  export  license."  Under  date  of  August  14,  1918,  Seller 
wrote  Buyer  confirming  his  quotation  for  the  wire,  and  in  accepting 
the  order  made  specific  reference  to  this  letter,  which  contained  the 
following  conditions  regarding  the  shipment: 

Shipment  can  probably  be  made  from  the  mill  during  the 
latter  part  of  December  or  January,  with  a  chance  for  improve- 
ment. This,  however,  is  merely  an  indication  of  what  we  hope 
to  be  able  to  accomplish,  and  we  assume  no  obligation  to  make 
shipment  by  any  definite  date,  shipment  being  necessarily 
subject  to  strikes,  accidents,  railway  freight  embargoes  and  all 
other  causes  of  delay  beyond  our  control  or  that  of  the  manu- 
facturing company,  and  if  and  when  permitted  by  the  United 
States  Government. 

The  order  of  September  5,  1918,  for  the  steel  as  originally  drawn  by 
Buyer  read  as  follows: 

"Shipment.  October-November,  1918,  from  mill,  subject  to  can- 
cellation if  export  license  not  received." 

At  Seller's  request  this  was  changed  to  read  as  follows : 

"Shipment.  As  soon  as  possible  from  mill,  subject  to  receipt  of 
export  license." 

The  export  license  was  duly  received  but  the  Priority  Committee 
of  the  War  Industries  Board  refused  to  issue  a  priority  certificate  for 
the  manufacture  of  this  lot  of  wire  and  Seller  on  that  account  could 
not  proceed  to  manufacture  the  same  at  that  time. 

On  October  14,  1918,  Buyer  notified  Seller  that  Buyer's  application 
for  priority  certificate  had  been  denied  and  asked  Seller  to  cancel  the 
order  and  to  confirm  this  cancellation.  Again  on  November  21,  1918, 
Buyer  notified  Seller  that  his  Calcutta  house  had  cancelled  the  order 


118  COMMERCIAL   ARBITRATION 

on  account  of  delay  and  Buyer  again  asked  Seller  to  confirm  cancella- 
tion. Seller,  however,  on  November  22nd,  declined  to  accede  to  Buyer's 
request  for  cancellation.  After  November  29th,  the  priority  certificates 
being  no  longer  required,  Seller  proceeded  to  manufacture  the  barbed 
wire  and  on  March  4,  1919,  notified  the  Buyer  that  the  goods  were 
about  ready  and  asked  for  shipping  instructions.  Buyer  on  March  11th 
notified  Seller  that  they  could  not  recognize  any  liability  in  the  matter 
and  again  asked  that  the  order  be  cancelled  and  this  notice  was  received 
by  Seller  on  March  12,  1919. 

The  questions  at  issue  were  (1)  the  right  of  Buyer  to  cancel  the 
contract  without  the  consent  of  Seller,  and  whether  the  contract  was 
cancelled  and,  if  not  cancelled,  (2)  what  damages,  if  any,  was  Seller 
entitled  to  receive  through  refusal  of  Buyers  to  fulfill  the  contract. 

Held,  That  Seller's  letter  of  August  14th  specifying  conditions 
under  which  the  quotation  was  made  contained  the  clause  and  we 
assume  no  obligation  to  make  shipment  by  any  definite  date,  shipment 
being  necessarily  subject  to  strikes,  accidents  *  *  *,  and  if  and 
when  permitted  by  the  U.  S.  Government.  The  words  and  when  permitted 
by  the  U.  S.  Government  precludes  any  limitation  being  claimed  for 
time  of  shipment  if  the  government  permits  were  lacking  and  confirms 
the  Seller's  claim  that  they  intended  this  to  be  a  positive  sale  without 
the  right  of  cancellation.  The  striking  out  of  shipment  dates  and  of  the 
words  referring  to  cancellation  in  the  order  for  the  goods  and  substitut- 
ing that  shipment  would  be  made  as  soon  as  possible  from  mill,  subject 
to  receipt  of  export  license,  seems  to  show  that  it  was  in  Seller's  mind 
that  the  order  could  not  be  cancelled  on  account  of  delay  in  shipment. 

It  will  be  noted  that  the  shipment  was  subject  to  receipt  of;  export 
license,  but  not  to  receipt  of  priority  certificate,  which  latter  might 
be  granted  at  some  indefinite  time. 

The  contract  is  to  a  certain  extent  one-sided  and  clearly  to  the 
Seller's  benefit  and  this  is  admitted  by  Seller,  who  claimed  he  would 
only  accept  the  order  at  that  time  under  such  conditions.  Buyer, 
however,  had  notice  of  this  when  he  signed  the  order  as  changed  by 
Seller.  Furthermore,  the  "general  conditions  of  sale"  referred  to  by 
Seller  in  his  letter  of  August  14,  1918,  to  which  they  stated  in  said  letter 
the  sale  was  subject,  contains  the  following  clause,  "insistence  upon 
suspension  of  manufacture  or  suspension  of  any  shipment,  if  not  ac- 
quiesced in  by  Seller,  may  be  treated  by  the  Seller  as  a  wrongful  termination 
of  the  contract  upon  the  part  of  the  purchaser;  and  the  purchaser  shall 
therefore  be  liable  for  all  damages  arising  out  of  such  termination." 


REPORTS  119 

No  evidence  was  introduced  that  Seller  did  not  proceed  to  manu- 
facture the  wire  and  make  same  ready  for  shipment  as  soon  as  possible 
after  priority  certificates  were  no  longer  required.  We  decide  that 
under  the  terms  and  conditions  of  this  particular  sale  Buyer  did  not 
have  the  right  to  cancel  on  account  of  delay  in  manufacture  and  ship- 
ment and  that  the  contract  remained  in  force. 

We  decide  that  Seller  is  entitled  as  damages  in  this  case  to  such 
differences  as  may  have  existed  between  the  contract  price  and  the 
prevailing  market  price  for  export  of  the  said  barbed  wire  on  March  12, 
1919,  which  was  the  date  when  Seller  received  notice  from  Buyer  that 
he  would  not  recognize  liability  in  the  matter,  which  constituted 
Buyer's  definite  refusal  to  accept  delivery.  (San  Francisco  Chamber 
of  Commerce  Arbitration,  1920). 


REPORTS  121 


F.  A.  Q. 


The  term  F.  A.  Q.  means  Fair  Average  Quality.  Usually  it  is 
followed  by  the  words  of  the  season,  when  it  follows  that  the  goods 
so  described  are  the  fair  average  quality  of  the  season.  This  description 
of  grade  permits  of  a  wide  latitude  in  determining  the  quality  of  goods 
so  described,  since  all  of  the  crop  of  a  commodity  must  be  considered 
in  arriving  at  the  average  of  the  season. 

In  general,  it  may  be  stated  that  the  term  F.  A.  Q.  should  be  avoided 
whenever  it  is  possible  to  fix  a  standard  of  grade  in  the  commodity 
under  contract,  thereby  avoiding  uncertainty  and  eliminating  one  of 
the  frequent  causes  of  dispute  between  Buyer  and  Seller. 

In  a  contract  specifying  Manila  Grade  Coconut  Oil,  without  the 
qualifying  clause  of  F.  A.  Q.,  arbitrators  were  of  the  opinion  that, 
even  in  the  absence  of  such  term,  the  description  Manila  Grade  must  of 
necessity  call  for  F.  A.  Q.  Manila  Grade.  (Foreign  Commerce 
Association  Arbitration  No.  46,  1922,  Page  121). 

Color  Reading  of  F.  A.  Q.  Manila  Grade  Coconut  Oil — 
Better  and  Poorer  Deliveries  Must  Be  Considered — Contract 
Should  Fix  Color  Limits — A  Philippine  manufacturer  sold  to  a 
manufacturer  in  the  United  States  a  given  tonnage  of  "Manila  Grade 
Coconut  Oil,  basis  5  per  cent,  maximum  7  per  cent  free  fatty  acids/' 
with  the  customary  allowances  provided  for  excess  acidity. 

The  Buyer  claimed  that  the  oil  was  not  F.  A.  Q.,  and  laid  particular 
stress  upon  the  following  points:  (1)  That  Seller  had  sold  Manila  Grade 
Coconut  Oil  of  fair  average  quality;  (2)  that  the  oil  was  not  F.  A.  Q. 
in  that  the  delivery  ex  "Gaelic  Prince"  showed  12  red  and  the  delivery 
ex  "Delagoa  Maru"  showed  11  red  in  the  Lovibond  color  tests  at  the 
time  of  shipment;  (3)  that  the  Arbitration  Committee  of  the  New  York 
Produce  Exchange  had  rendered  a  decision  under  date  of  July  15,  1921, 
fixing  the  limits  of  F.  A.  Q.  Manila  Coconut  Oil  at  a  point  under  12  red. 
Buyer,  therefore,  claimed  an  allowance  of  y%  cent  per  pound  on  the 
entire  shipment.  No  other  features  of  the  contract,  dated  August  29, 
1921,  were  in  dispute. 

In  support  of  the  limitation  on  color,  the  Buyer  submitted  in- 
formation as  to  deliveries  made  to  him  of  approximately  4,000 
tons  of  Manila  Coconut  Oil  in  which  the  color  was  declared  to  be 
not  darker  than  7.5  red. 


122  COMMERCIAL   ARBITRATION 

The  arbitrators  said: 

"The  contract  is  C.  I.  F.  in  terms,  somewhat  modified  by  guarantee 
of  acidity  and  weights  on  arrival,  subject  to  the  published  rules  of 
the  Foreign  Commerce  Association.  The  Association  has  no  published 
rules  covering  C.  I.  F.  sales,  and  therefore,  the  ordinary  F.  O.  B.  cars 
rules  could  not  be  held  to  apply  to  this  contract  except  insofar  as  they 
might  indicate  or  establish  a  custom  of  trade  in  connection  with  the 
particular  commodity  and  thus  aid  in  construing  an  ambiguous  clause 
in  this  contract.  The  contract,  as  to  quality,  described  the  oil  as  basis 
5  per  cent,  maximum  7  per  cent  F.  F.  A.  This  is  not  identical  with  the 
grade  covered  by  Association  Rule  No.  329,  under  which  rule,  in  ad- 
dition to  a  guarantee  of  free  fatty  acids,  there  is  a  guarantee  as  to 
moisture  and  impurities  and  a  further  provision  that  the  oil  shall  be 
fair  average  quality  of  the  season  of  the  country  in  which  it  is  pressed. 

"As  to  whether  the  term  'Manila  Grade  Cocoanut  Oil'  is  synonymous 
with  F.  A.  Q.  Manila  Coconut  Oil,  the  arbitrators  believe  that  full 
effect  must  be  given  to  the  words  Manila  grade  as  descriptive  of  the 
kind  of  oil  sold.  If  Seller  had  not  intended  the  words  to  mean  anything 
they  would  not  have  been  inserted  in  the  contract.  They  add  something 
to  the  description  of  the  grade  of  oil  in  addition  to  the  guarantee  of 
free  fatty  acids  content  and  the  only  reasonable  interpretation  is  that 
in  selling  Manila  Grade  Coconut  Oil,  Seller  intended  to  sell  and  Buyer 
had  a  right  to  assume  that  he  bought  F.  A.  Q.  or  ordinary,  or  usual 
Manila  grade.  Therefore,  in  the  opinion  of  the  arbitrators,  even  in  the 
absence  of  the  term  F.  A.  Q.,  the  term  'Manila  grade'  must  of  necessity 
call  for  F.  A.  Q.  Manila  grade. 

"The  Association  rules,  as  well  as  the  custom  of  trade,  give  various 
standard  grades  of  Coconut  Oil,  some  providing  for  color  as  the 
standard  of  quality  and  others  for  free  fatty  acids  standard.  The 
Buyer  and  Seller  in  this  transaction  have  elected  to  trade  under  de- 
scription of  quality  fundamentally  predicated  upon  the  free  fatty  acids 
content  of  the  oil,  and  without  any  specific  guarantee  of  color.  Never- 
theless, the  arbitrators  believe  that  under  F.  A.  Q.  sales  color  is  implied, 
but  only  within  certain  very  wide  ranges. 

"In  order  to  arrive  at  what  is  within  fair  average  quality  of  the 
season  as  to  color,  the  trade  must  take  into  consideration  not  only  the 
very  best  and  the  average  deliveries  as  to  color,  but  also  the  run  of 
poorer  deliveries  as  to  color.  In  this  connection,  the  arbitrators  have 
examined  the  records  of  Curtis  &  Tompkins,  chemists  at  San  Francisco, 
covering  a  little  less  than  500  samples  and  tests  made  during  1919,  1920 


REPORTS  123 

and  1921.  In  1919  the  minimum  red  reading  was  4.6,  the  maximum  21.7; 
in  1920  the  minimum  red  reading  was  6.2,  the  maximum  21.0;  in  1921 
the  minimum  red  reading  was  5.7,  the  maximum  22.5.  In  taking  red 
color  into  consideration  full  weight  must  be  given  to  these  authentic 

data. 

"It  is  true  that  a  decision  has  been  rendered  by  the  Arbitration 
Committee  of  the  New  York  Produce  Exchange  touching  upon  color 
of  F.  A.  Q.  Coconut  Oil.  However,  all  of  the  contract  conditions  in 
that  case  are  not  before  the  arbitrators  at  the  present  time  and  it, 
therefore,  does  not  appear  to  the  arbitrators  that  they  must  necessarily 
follow  this  decision.  The  arbitrators  believe  that  where  Buyers  desire 
a  limitation  upon  color  of  oil  they  should  resort  to  specifically  fixing  such 
color  limitation  in  their  contracts  of  purchase  as  already  provided  for  in 
special  quality  rules.  In  the  absence  of  such  limitations,  the  arbitrators 
must  take  into  consideration  the  wide  variance  in  color  of  Manila 
Coconut  Oil  in  order  to  arrive  at  the  F.  A.  Q.  of  the  season. 

Held,  That,  in  view  of  the  data  made  available  to  the  trade  through 
reputable  chemists,  coupled  with  their  own  experience,  the  arbitrators 
are  of  the  unanimous  opinion  that  the  oil  delivered  ex  "Gaelic  Prince" 
and  ex  "Delagoa  Maru"  is  Manila  Grade  Coconut  Oil  and,  although 
admittedly  high  in  color  reading,  is  nevertheless  within  the  limits  which 
might  reasonably  be  expected  in  F.  A.  Q.  Manila  Oil,  and  the  claim  of 
Buyer  is  therefore  disallowed.  (Foreign  Commerce  Association  Arbitra- 
tion No.  46,  1922). 


124  COMMERCIAL  ARBITRATION 

F.  O.  B.  Foreign  Port 

Coffee  Sold  F.  O.  B.  San  Salvador  Port,  Resold  to  Genoa, 
Italy,  Merchant — Responsibility  for  Award  of  London  Arbitra- 
tors on  Question  of  Quality — A,  a  San  Francisco  merchant,  sold  to 
B,  another  merchant  in  the  same  place,  a  quantity  of  unwashed  Sal- 
vador Coffee,  F.  0.  B.,  Salvador  port.  The  contract  was  silent  as  to 
whether  Buyer  was  to  have  his  agent  inspect  the  coffee.  Payment  was 
to  be  made  as  soon  as  A  received  a  cable  that  the  coffee  had  been  delivered 
to  B's  Agent  at  San  Salvador.  B  resold  the  coffee  to  a  merchant  in  Genoa, 
Italy,  and  when  it  arrived  there  objection  was  made  as  to  the  quality. 
The  question  of  quality  was  submitted  to  arbitration  by  B  and  the 
Genoa  merchant,  and  the  place  of  arbitration  was  London.  The 
arbitrators  made  an  award  in  favor  of  the  Genoa  merchant  and  against 
B,  who  in  turn  proceeded  to  arbitrate  in  San  Francisco  with  A,  after 
demanding  and  having  been  refused  reimbursement  for  the  amount  of 
the  award  made  by  the  London  board. 

A,  the  Seller,  contended  that  his  obligation  terminated  when  his 
agent  in  San  Salvador  delivered  the  coffee  F.  0.  B.  Salvador  port,  and 
B's  agent  accepted  it,  with  or  without  inspection.  The  Buyer  contended 
that  Seller's  responsibility  as  to  quality  followed  the  coffee  to  any  point 
of  destination  to  which  Buyer  might  subsequently  ship  it  on  resale  to  a 
third  party.  It  will  be  noted  that  the  contract  was  silent  in  regard  to 
the  coffee  being  subject  to  inspection  for  quality  and  arbitration  at 
destination  if  quality  should  be  claimed  to  be  inferior  to  that  purchased. 

The  arbitrators  said  that  they  were  not  able  to  read  what  was  in 
the  minds  of  the  contracting  parties  at  the  time  the  sale  and  purchase 
were  made,  and  therefore  considered  the  terms  of  the  contract  and  the 
evidence  submitted.  The  arbitrators  said  that  if  it  had  been  demon- 
strated that  A  could  have  obtained  redress  from  his  supplier  there 
would  be  a  moral  obligation  upon  the  part  of  A  to  reimburse  B.  There 
was  no  evidence  that  this  could  be  done. 

Held,  If  it  had  been  intended  that  in  an  F.  O.  B.  sale,  Salvador 
port,  the  quality  was  subject  to  determination  at  point  of  final  desti- 
nation, and  arbitration  in  case  of  dispute,  the  contract  should  have  so 
stated.  Nothing,  however,  was  said  in  the  contract  about  arbitration 
at  destination,  and  it  was  admitted  by  both  parties  that  they  had  no 
verbal  understanding  in  regard  to  such  arbitration  being  held.  The 
claim  for  reimbursement  is  disallowed.  (San  Francisco  Chamber  of 
Commerce  Arbitration,  1918.) 


REPORTS  125 


"Full  Cargo"  Sales 


Buyer  Entitled  to  All  Copra  Loaded  in  Vessel,  Notwithstand- 
ing Estimated  Tonnage  on  Contract  Was  Considerably  Less — 
Term   "Full  Cargo* '   Is  Not  a   Limitation  of  Quantity — A,  an 

importer,  sold  B,  a  full  cargo  of  Copra  of  about  600  to  about  700  long 
tons  *  *  *  loading  at  Fiji,  per  schooner  "Alumina."  The  charter 
party  provided  that  a  full  cargo  of  copra  in  bulk  and/or  in  sacks  must 
be  shipped  by  the  importer.  It  developed  when  the  vessel  was  loading 
that  the  carrying  capacity  was  900  tons  and  the  importer  was  obliged, 
under  the  charter  party,  to  load  900  tons  in  order  to  furnish  the  re- 
quired full  cargo. 

Upon  arrival  of  the  vessel  at  a  Pacific  Coast  port,  the  Buyer 
claimed  the  right,  under  his  contract  of  delivery,  of  the  full  cargo  of 
900  tons,  while  the  Seller  contended  he  was  obliged  to  deliver  only 
"about  600  tons  to  about  700  long  tons"  and  if  he  delivered  within 
10  per  cent  of  700  tons  he  would  have  fulfilled  his  contract. 

Held,  That  the  words  full  cargo  constitute  the  governing  clause 
in  the  contract  as  to  quantity,  and  that  the  words  about  600  to  about  700 
long  tons  refer  only  to  the  estimated  carrying  capacity  of  the  vessel. 
If  the  governing  clause,  a  full  cargo,  was  not  intended  to  mean  a  full 
cargo,  it  was  entirely  superfluous  and  why  was  it  inserted?  If  the  600 
to  700  tons  were  to  be  construed  as  limiting  the  amount  there  should 
have  been  included  in  the  contract  the  words  not  less  than  about  600 
nor  more  than  about  700  long  tons.  In  this  instance  no  evidence  was 
introduced  to  show  that  the  vessel  had  previously  carried  copra  and  it 
being  a  well  known  fact  that  copra  is  not  a  dead  weight  material,  it 
was  impossible  for  the  principals  in  this  case  to  more  than  get  a  rough 
estimate  of  the  tonnage  the  vessel  would  carry.  Buyer  shall  take 
delivery  of  the  entire  cargo  ex  the  S/V  "Alumina."  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1917). 


126  COMMERCIAL  ARBITRATION 


Future  Sales 


Future  Sales  "Subject  to  Opening  Price* '  of  Another  Packer 
— Such  Price  Shall  Control — Subsequent  Reduction  Made 
Retroactive  Does  Not  Apply — An  exporting  company  purchased  a 
quantity  of  No.  1  Tall  Alaska  Chum  Salmon,  "Price  to  be  Seller's 
opening  price,  guaranteed  against  published  opening  prices"  of  another 
named  packer. 

Under  date  of  September  8,  1919,  Seller  issued  his  opening  price 
for  No.  1  Tall  Alaska  Chum  Salmon  at  $2.10  per  dozen,  and  under  the 
same  date  the  other  designated  packer  fixed  the  identical  opening 
price  for  the  same  grade  of  Salmon. 

Buyer  claimed  that  the  packer  upon  whose  opening  price  the  sale 
was  predicated  reduced  his  price  on  Chums,  1919  Pack,  to  $1.75  per 
dozen  and  had  made  this  lower  price  applicable  on  sales  made  by  it  for 
that  season.  Buyer  claimed  that  while  the  other  designated  packer 
published  opening  price  was  $2.10,  its  effective  opening  price  was 
$1.75,  and  he  claimed  Seller  should  allow  him  the  reduced  price  of 
$1.75  on  the  2,500  cases  in  question. 

Held,  That  the  sale  in  question,  under  the  contract,  was  clearly 
based  upon  the  published  opening  price  of  another  designated  packer. 
This  cannot  be  changed  to  mean  any  effective  opening  prices  made 
subsequently.  The  published  opening  price  was  made  September  8, 1919, 
and  the  price  was  not  reduced  until  October  15,  1919,  over  a  month 
later  and  the  making  of  such  reduced  price  applicable  to  previous 
sales,  based  upon  the  published  opening  price,  must  be  voluntary  upon 
the  part  of  sellers  in  any  particular  cases  and  is  not  obligatory.  (San 
Francisco  Chamber  of  Commerce  Arbitration,  1920). 


REPORTS  127 


Inspection 


Under  a  C.  I.  F.  contract  covering  Prunes,  certificate  of  inspection 
of  the  goods  issued  at  time  of  shipment  is  final  under  the  so-called 
Water  Contract  of  the  Dried  Fruit  Association  of  California.  (Dried 
Fruit  Association  of  California  Arbitration  No.  1,  1921,  Page  47). 

Goods  Sold  F.  O.  B.  Dock,  San  Francisco,  Subject  to  In- 
spection, Must  Be  Inspected  Before  Export  Shipment — Weights 
at  Point  of  Shipment  Govern — A  Pacific  Coast  company  purchased 
from  an  iron  company  a  given  tonnage  of  Plate  Cuttings.  Under 
date  March  13,  1920,  Buyer  accepted  a  verbal  option  given  by  Seller's 
representative,  the  acceptance  specifying: 

Fifty  tons  of  2,000  lbs.  each,  Steel  Plate  Cuttings,  Good 
quality  mild  steel,  all  flat  and  cut  parallel,  no  chequered  plates, 
dimensions  l/i  inch  to  Yi  inch  thick,  1  to  6  inches  wide,  15 
inches  to  20  inches  long,  material  to  be  packed  compactly  in 
barrels  for  export.  Price,  $41.00  per  ton,  F.  O.  B.  dock,  San 
Francisco. 

Seller  in  letter  dated  March  15,  1920,  confirmed  Buyer's  above 
order  of  March  13th.  The  order  was  given  by  Buyer  with  the  under- 
standing that  the  goods  would  be  subject  to  Buyer's  inspection  at 
Seller's  yards. 

Seller  in  his  letter  of  confirmation  of  March  15th  stated:  "This 
material  is  now  available  for  shipment  and  can  be  inspected  at  our 
yards  at  any  time." 

Buyer  claimed  that  when  his  surveyor  called  at  the  yards  to  inspect 
the  goods  he  found  the  goods  were  already  packed  in  barrels  ready  for 
shipment,  the  tops  of  the  barrels  being  covered  with  burlap  fastened  on 
the  barrels,  so  that  he  could  not  inspect  the  contents  without  unpacking 
the  shipment,  and  he  was  shown  only  a  small  sample  and  that,  therefore, 
he  did  not  make  an  inspection.  Buyer  stated  that  his  Hongkong 
purchaser  claimed  that,  upon  inspection  there,  it  was  found  that  the 
goods  were  not  up  to  specifications  as  they  consisted  of  a  considerable 
quantity  of  pieces  of  checquered  plating  and  a  small  percentage  not 
rectangular  or  flat,  which  did  not  conform  to  specifications  as  to  size. 
Buyer  claimed  an  allowance  of  $761.61  for  difference  in  quality  and 
$210.61  for  alleged  short  out  turn  weight  at  Hongkong. 


128  COMMERCIAL   ARBITRATION 

Held,  That  the  goods,  having  been  sold  F.  O.  B.  dock,  San  Fran- 
cisco, with  the  right  of  inspection  at  Seller's  yards,  it  was  the  duty  of 
Buyer  to  inspect  them  before  shipment.  The  fact  that  the  goods  had 
been  packed  in  barrels  ready  for  shipment  did  not  prevent  such  in- 
spection, for  Buyer's  surveyor  would  have  been  entirely  justified  in 
selecting  random  barrels  of  at  least  10  per  cent  of  the  shipment,  cutting 
the  burlap  covering  and  dumping  contents  so  that  he  could  inspect 
same,  if  Seller  chose  to  pack  the  goods  prior  to  inspection,  which  he 
knew  would  be  made.  Buyer's  claim  is  disallowed  on  the  grounds 
that  the  goods  were  purchased  subject  to  inspection  and  Buyer  should 
have  inspected  the  goods  and  found  objection  to  quality,  if  any,  at 
that  time,  or,  if  he  was  willing  to  waive  inspection  because  goods  were 
packed,  he  should  have  obtained  a  written  guarantee  from  Seller 
agreeing  to  make  good  any  loss  suffered  by  Buyer  in  case  the  goods 
were  found  not  as  per  contract.  As  to  short  weight  claimed  at  Hong- 
kong, the  price  being  based  on  F.  0.  B.  dock,  San  Francisco,  such  San 
Francisco  weights  must  govern.  (San  Francisco  Chamber  of  Commerce 
Arbitration,  1920). 


REPORTS  129 


Insurance 


Payment  of  Extra  Cost  on  Deckload  of  Lumber — Where  Mill 
Cost  Governs — A  shipper  of  lumber  and  a  vessel  owner  had  a  dispute 
as  to  the  responsibility  for  the  payment  of  extra  insurance  on  a  deckload 
of  lumber  in  the  off  shore  trade,  the  shipper  contending  that  the  owner 
should  pay  for  the  extra  insurance,  based  on  the  sale  price  of  such 
deckload,  plus  the  customary  10  per  cent,  while  the  vessel  owner 
claimed  that  the  cost  price  at  the  mill  should  be  the  basis  of  payment 
for  extra  insurance. 

The  charter  party  submitted  to  the  arbitrators  contained  the 
following  clause:  " Vessel  to  pay  the  extra  insurance  on  deck  load  (not 
to  exceed  under  deck  rate),  which  is  to  consist  of  only  the  longest 
sizes  of  the  rough  lumber  unless  otherwise  instructed  by  charterers." 

Held,  That  the  insurance  should  be  based  on  the  cost  price  at  the 
mill,  i.  e.,  the  contract  price  of  the  purchase,  plus  10  per  cent,  which 
has  been  customary  in  the  trade  for  many  years  past.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1917). 

Typewritten  Clause  in  Insurance  Policy  Controls  Printed 
Clause — Delay  in  Documents  Covering  C.  I.  F.  Sale — Where 
Seller  Guarantees  Buyer  Against  Expense  Incurred  by  Delay — 

A  Pacific  Coast  importer  sold  to  a  San  Francisco  dealer  a  quanta  of 
No.  1  Long  Grain  Saigon  Rice,  February-March  shipment  from  the 
Orient,  C.  I.  F.  Santiago,  Cuba.  The  contract  was  dated  March  8th. 
March  26th  bills  of  lading,  with  February  dating,  insurance  policies 
and  quality  certificates  covering  a  portion  of  the  contract  quantity 
of  rice  were  presented  to  Buyer,  together  with  a  letter  guaranteeing 
payment  of  any  charges  that  might  accrue  at  Santiago,  Cuba,  by 
reason  of  the  arrival  there  of  the  S.  S.  "West  Cajoot",  which  reached 
the  destination  on  March  20th,  in  advance  of  the  documents. 

The  Buyer  objected  to  the  tender  of  documents  on  the  following 
grounds : 

1.  There  were  conflicting  clauses  in  the  insurance  policy,  namely, 
the  face  of  the  policy  bore  the  typewritten  notation  with  average  as 
usual,  while  the  printed  body  of  the  policy  specified  not  subject  to  average 
on  shipment  of  Rice. 

2.  That  the  carrier  had  arrived  at  destination  March  20th,  five 
days  prior  to  presentation  of  documents. 

3.  That  the  papers,  having  arrived  at  San  Francisco  at  such  a  late 
date,  what  was  intended  as  a  future  sale  became  a  spot  transaction, 
inasmuch  as  the  bills  of  lading  show  a  dating  of  February  3rd  and  were 


130  COMMERCIAL  ARBITRATION 

not  presented  until  52  days  after  shipment,  and,  therefore,  the  cargo 
should  have  been  sold  as  afloat. 

Seller  contended  that  his  documents  were  entirely  in  order,  that  the 
typewritten  clause  in  the  insurance  policy  controlled  the  printed 
clause,  and  was  usual,  and  that  the  delay  in  receipt  of  the  documents 
was  evidently  due  to  the  mails  and  through  no  fault  of  Seller.  Further, 
that  the  contract  provided  for  payment  on  presentation  of  Oriental 
shipping  documents  or  delivery  order. 

Held,  (1)  That  the  objection  to  the  insurance  policy  is  not  well 
taken  in  this  particular  case,  and  that  the  policy  is  regular  and  in  order. 

(2)  That  the  question  whether  the  rice  was  actually  afloat  at 
the  time  of  making  the  contract  is  immaterial,  for  the  reason  that  the 
purchase  was  made  for  February-March  shipment. 

(3)  That  the  delay  in  presentation  of  documents  is  not  vital, 
inasmuch  as  Seller  guarantees  protection  to  the  Buyer  against  all 
charges  which  may  accrue  on  account  of  documents  not  having  been 
presented  before  arrival  of  the  vessel  at  Santiago.  (Rice  Association 
of  California  Arbitration  No.  18,  1920). 

WAR  RISK  INSURANCE 

When  a  contract  for  goods  on  a  delivered  basis  is  silent  as  to  the 
placing  of  war  risk  insurance,  such  insurance,  if  placed,  is  for  the  Seller's 
account. 

The  rule  would  be  different  under  C.  I.  F.  terms,  the  Seller  being 
responsible  for  usual  marine  insurance  only,  and  war  risk  would  be  for 
Buyer's  account,  if  required  by  Buyer. 

War  Risk  on  Goods  Under  Delivered  Contract  —  In  May, 
1914,  a  San  Francisco  importer,  sold  to  a  refiner  a  quantity  of 
Straits  Tin  to  be  shipped  ten  (10)  tons  per  month,  commencing 
June,  1914,  and  ending  March,  1915,  deliverable  at  San  Francisco  ex 
steamer(s)  from  Singapore,  Straits  Settlements.  In  July,  1914,  war  was 
declared  in  Europe,  and  had  an  immediate  effect  on  all  shipments 
as  war  risk  insurance  was  required.  Prior  to  the  August  and  September 
shipments,  the  Seller  notified  the  Buyer  that  war  risk  insurance  would 
have  to  be  placed  on  all  shipments  and  it  would  be  for  Buyer's  account. 
Buyer  objected,  insisting  that  as  he  had  bought  the  tin  delivered  and 
there  being  no  mention  in  the  contract  as  to  war  risk  insurance,  such 
was  not  rightly  chargeable  to  him. 

Held,  That  as  the  goods  were  contracted  for  at  a  delivered  price, 
the  tin  remained  the  property  of  the  Seller  until  delivery  was  effected, 
and  therefore,  if  war  risk  insurance  was  necessary  it  was  for  the  account 
of  Seller.     (San  Francisco  Chamber  of  Commerce  Arbitration,   1914). 


REPORTS  131 


Joint  Account  Purchase  and  Sale 

Failure  to  Give  Shipping  Instructions  Does  Not  Permit 
the  Other  Party  to  Abrogate  Agreement — A,  a  California  Bean 
shipper,  and  B,  an  Alabama  bean  dealer,  purchased  two  cars  of 
California  Beans  from  C,  also  a  California  bean  shipper.  Under  date 
of  April  17,  1917,  B  wrote  the  following  letter  to  A: 

''Gentlemen:  For  your  information  will  state  that  we 
hold  contract  of  C  for  two  cars  Blackeyes  at  6J^  cents,  date 
of  contract  March  27,  1917. 

Will  state  that  we  hold  one  car  of  this  contract  subject 
to  your  orders,  in  that  we  own  this  contract  jointly,  you 
to  have  one  car,  ourselves  one  car. 

(Signed)     B". 

B  claimed  to  have  asked  A  for  shipping  instructions  and  failing 
to  receive  same,  B  took  delivery  of  the  car  and  handled  it  for  his  own 
account.  Under  date  of  January  11,  1918,  B  wrote  to  A  in  response 
to  a  request  for  settlement  of  the  joint  account,  as  follows: 

"Gentlemen:  We  wired  and  wrote  you  for  shipping 
instructions  on  this  car  and  having  no  response  we  presumed 
you  did  not  want  the  goods  and  felt  that  your  contract  was 
cancelled." 

Held,  That  failure  to  give  shipping  instructions  does  not  cancel  a 
contract.  B  would  have  been  within  his  rights  had  he  drawn  upon  A, 
with  warehouse  receipt  attached,  when  shipping  instructions  were  not 
forthcoming  on  or  before  October  31,  1917,  when  the  time  for  shipment 
under  the  contract  nominally  would  have  expired.  Instead  of  placing 
the  shipment  in  warehouse  and  drawing  upon  A,  with  warehouse 
receipt  attached,  as  is  the  custom  of  the  trade,  B  took  delivery  of  the 
car  in  question  and  handled  same  for  his  own  account.  Therefore,  B 
shall  forthwith  make  accounting  to  A  for  one  minimum  car  of  Blackeye 
Beans,  crop  of  1917,  September-October  delivery,  purchased  from  C; 
said  accounting  to  include  all  charges  and  expenses  to  which  B  was 
put,  and  shall  forthwith  pay  to  A  the  profits  derived  thereon,  less 
charges  and  expenses.  (California  Bean  Dealers  Association  Arbitra- 
tion No.  25,  1917). 


REPORTS  1 33 


Lumb 


umber 

Buyer's  Inability  to  Obtain  Specifications  for  Lumber  from 
Foreign  Buyer  No  Excuse  for  Non- Performance  of  Contract — 
Nor  Is  Buyer  Excused  for  Inability  to  Secure  Vessel  for  Cargo — 
Damages  for  Non-Performance — On  February  25,  1914,  Buyer 
contracted  to  purchase  from  Seller  approximately  3,500,000  feet  of 
Douglas  Fir,  15  per  cent  more  or  less  to  suit  capacity  of  vessel,  shipment 
to  be  by  steamer  October-November-December,  1914.  On  March 
5,  1914,  a  similar  contract  for  the  same  amount  of  lumber  and  same 
shipment  was  made. 

The  Seller  claimed  that  specifications  for  the  lumber  were  not 
furnished,  nor  was  any  vessel  named,  nor  was  delivery  of  the  lumber 
taken  by  Buyer  before  the  expiration  of  the  time  limit  for  shipment 
of  both  cargoes,  under  the  contracts,  viz.:  December  31,  1914.  Buyer 
admitted  this  was  correct,  but  claimed  that  he  had  been  unable  to 
give  specifications  on  account  of  not  being  able  to  get  them  from  the 
parties  in  Australia  to  whom  he  had  sold  the  lumber  and  that  he 
had  not  named  a  vessel  and  taken  delivery  on  account  of  not  being 
able  to  secure  a  vessel. 

Buyer  on  September  24,  1914,  proposed  cancelling  the  contracts, 
but  this  was  refused  by  Seller  and  there  was  no  evidence  that  Buyer 
offered  at  that  time  to  pay  any  damages  on  account  of  cancelling  the 
contracts. 

The  time  for  delivery  under  the  terms  of  the  original  contracts 
expired  December  31,  1914.  There  was  no  evidence  that  the  Seller 
endeavored  to  terminate  the  contract  on  December  31,  1914,  and 
charge  the  Buyer  with  the  difference  between  the  contract  price  and 
the  prevailing  market  price  on  that  date,  or  to  notify  Buyer  that  the 
lumber  would  be  sold  for  Buyer's  account  which  he  had  the  right 
to  do.  Neither  is  there  any  evidence  that  the  Buyer  endeavored  to 
exercise  his  right  on  December  31,  1914,  to  direct  the  Seller  to  sell  the 
lumber  involved  in  the  contract,  for  Buyer's  account,  and  charge 
Buyer  with  the  difference  between  the  contract  price  and  the  price 
at  which  the  lumber  was  sold.  On  the  contrary,  the  evidence  submitted 
was  clear  in  showing  that  both  contracts  were  extended  by  mutual  consent 
from  time  to  time  and  that  they  were  not  terminated  until  March  17, 
1915,  at  which  time  the  Seller  rendered  to  the  Buyer  a  bill  for  $17,500 
to  cancel  the  two  contracts  in  dispute,  said  amount  being  the  amount 
Seller  considered  a  fair  difference  ($2.50  per  M  ft.)  between  the  contract 


134  COMMERCIAL   ARBITRATION 

price  of  the  two  cargoes  and  the  going  market  price  that  day.  That 
Buyer  considered  the  contracts  extended  from  December  31,  1914,  is 
evidenced  by  his  letter  of  February  17,  1914,  to  Seller  in  which  he 
states  "we  appreciate  the  extension  in  time  which  you  are  giving  us  on 
this  lumber,  and  we  are  doing  everything  within  our  power  to  arrange 
for  lifting  these  cargoes  at  an  early  date."  Also,  in  the  same  letter  his 
statement  "again  assure  you  that  we  will  take  delivery  of  the  lumber 
as  soon  as  the  first  opportunity  presents  itself/'  and  further  by  verbal 
conversations  subsequent  to  that  date  as  testified  to  before  the 
Committee  by  both  parties. 

Held,  That  the  contracts  were  extended  by  mutual  consent  and 
that  they  were  not  terminated  until  March  17,  1915,  and  that  the 
prevailing  market  price  for  Douglas  Fir  lumber  on  or  about  March 
17,  1915,  was  $8.50  per  M  ft.  for  steamer  shipment.  The  Buyer  had 
the  option  of  taking  15  per  cent  more  or  less  of  the  contract  amount 
to  suit  capacity  of  vessel.  As  no  vessel  was  named  and  therefor  it 
cannot  be  determined  whether  more  or  less  than  the  7,000  M  ft.  would 
have  been  taken,  we  fix  7,000  M  feet,  as  a  fair  estimate  of  the  amount 
that  would  have  been  taken. 

As  it  is  conceded  by  Seller  that  the  lower  priced  cargoes  would 
have  been  taken  if  shipped,  we  find  that  the  contract  price  involved 
in  this  case  is  $10.50  per  M  ft.  less  2j/£  per  cent  twice,  or  $9.9816 
net,  and  that  the  cost  under  the  prevailing  market  price  on  or  about 
March  17th  would  have  been  $8.50  per  M  ft.  less  2Vi  per  cent  twice,  or 
$8.0803  per  M  net,  and  that  the  actual  difference  between  the  contract 
price  and  the  prevailing  market  price  on  or  about  that  date  would 
have  been  $1.9013  net  per  M  ft.,  which  for  7,000  M  ft.  would  have 
amounted  to  $13,309  if  such  actual  difference  were  to  be  made  the 
basis  for  damages  in  this  case.  The  Committee,  however,  has  taken 
into  account  the  extraordinary  conditions  caused  by  the  present  war 
in  all  the  exchanges  of  this  country  and  in  other  financial  communities 
of  the  world,  and  we  therefore  fix  the  lump  sum  of  $10,000  as  a  fair 
settlement  in  this  case  between  the  contracting  parties.  We  decide 
that  Buyer  shall  pay  the  Seller  that  sum  in  full  settlement  for  all 
claims  for  failure  to  take  delivery  under  said  contracts.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1915). 

Damages  for  Failure  to  Lift  Cargo  Under  Contract — An  Oregon 
mill  sold  600,000  feet,  15%  more  or  less,  Rough  Oregon  Pine  Lumber, 
to  be  loaded  at  an  Oregon  port  May- June- July- August,  1920.  The 
contract  was  dated  March  5,  1920.  The  price  was  to  be  $34  per  M 
feet,  basis  "H"  list,  if  vessel  commenced  to  load  any  time  in  May  or 


REPORTS  135 

June  and  $36  per  M  feet,  basis  "H"  list,  if  vessel  commenced  to  load 
any  time  in  July  or  August. 

Buyer  was  not  able  to  furnish  vessel  in  time  to  make  August  loading 
and  Seller  claimed  $4500.00  and  interest,  claiming  this  amount  to  be 
the  difference  in  price  that  he  sold  to  Buyer,  $36  base,  net  cash,  and  the 
price  at  which  he  eventually  did  sell  the  lumber,  viz:  $30  base,  less 
2H  per  cent  commission  and  2J^  per  cent  discount.  Buyer  claimed  that 
the  price  of  $30  base,  was  less  than  the  market  price  at  that  time  and 
that  Seller's  claim  was  excessive. 

Held,  That  Buyer  was  in  default  in  that  he  did  not  tender  the  vessel 
for  loading  within  the  time  limit  of  the  contract,  as  the  "Honoipu", 
which  he  specified  as  having  been  tendered  under  the  contract  for  lifting  the 
cargo,  would  have  made  September  loading,  instead  of  August  loading. 

We  find  that  the  specification  for  lumber  tendered  by  Buyer  was  a 
proper  one  but  feel  that  this  has  no  bearing  on  the  matter,  the  vessel  not 
having  been  tendered  for  loading  in  the  proper  month,  as  above  stated. 

We  find  that  the  average  price  for  lumber  of  the  description  named 
at  that  period  of  time  was  about  $31  per  M,  and  we  decide  that  Buyer 
shall  pay  to  Seller  at  the  rate  of  $5  per  thousand  feet,  or  $3000  as  the 
difference  between  the  contract  price,  $36  for  July-August  loading, 
and  $31  and  also  interest  at  6  per  cent  on  said  amount  from  Sept. 
1,  1920,  until  paid,  and  that  said  payment  shall  constitute  full  settle- 
ment of  all  claim  in  this  case.  (San  Francisco  Chamber  of  Commerce 
Arbitration,  1921.) 

Crating  of  Lumber  for  Export — Damage  for  Improper  Pack- 
ing— A  sold  to  B  40,000  feet  of  Redwood  for  shipment  to  Salvador 
per  S.  S.  "Joan  of  Arc"  in  1919.  The  contract  provided  for  Green 
Clear  T  &  G  Redwood,  crated,  5/8x4-10/16',  price  $47.  S.  M.,  delivered 
at  San  Francisco  for  export.  This  order  followed  a  quotation  by  Seller 
on  July  7,  1919,  for  the  above  lumber,  in  which  the  packing  was  specified 
crated  for  export  and  on  July  12th  Buyer  confirmed  his  acceptance  of 
this  offer.  On  August  13th  Buyer  notified  Seller  that  the  receipt  of  the 
steamer  on  which  goods  were  shipped  from  mill  to  San  Francisco  called 
for  u691  bundles"  instead  of  691  crates,  and  that  if  the  lumber  was  not 
properly  crated  for  export  shipment  Buyer  would  hold  Seller  responsible 
for  any  claims  that  might  arise  on  that  account. 

Seller  on  August  15th  replied  that  his  inspectors  reported  the  goods 
were  crated  in  the  usual  manner  for  export  and  he  disclaimed  any 
responsibility  should  claim  be  entered.  The  goods  were  shipped  on 
August  20,  1919,  according  to  bill  of  lading,  to  San  Salvador  with  trans- 
shipment at  La  Libertad 


136  COMMERCIAL   ARBITRATION 

Buyer  subsequently  made  claim  on  Seller  for  25%  of  the  C.I.F. 
price  of  the  shipment  consisting  of  above  40,000  feet  of  T  &  G  Redwood 
Lumber,  the  invoice  price  being  $2,603.51,  on  which  he  claimed  $650.88 
for  damages  which  he  had  allowed  his  buyers  in  San  Salvador  on 
account  of  damaged  condition  of  the  lumber  upon  arrival  due  to  the 
T  &  G  not  being  properly  crated.     This  claim  was  disputed  by  Seller. 

Held,  That  Seller  was  at  fault  because  the  evidence  shows  that  the 
lumber  was  not  properly  crated  for  export.  On  the  other  hand  we  find 
that  Buyer  was  negligent  in  not  rejecting  the  shipment  at  San  Francisco 
if  he  felt  the  goods  was  not  crated  as  per  contract,  or  in  not  insisting 
that  Seller  crate  the  goods  in  a  better  manner,  as  was  done  by  him  on  a 
subsequent  shipment  of  the  same  kind  of  lumber. 

We  accept  the  appraisement  of  a  construction  engineer  at  San 
Salvador  for  the  damage  to  the  goods  at  25%  as  correct.  We  feel, 
however,  that  Seller's  liability  cannot  be  expected  to  follow  goods  to 
ultimate  destination,  for  there  is  no  way  of  determining  what  kind  of 
handling  the  goods  would  receive  from  various  carriers  while  enroute  to 
ultimate  destination. 

Therefore,  we  find  that  a  fair  basis  for  arriving  at  the  damages  in 
this  case  is  an  allowance  of  25%  of  the  ex  dock  San  Francisco  value  for 
the  T  &  G  lumber,  which  allowance  would  be  $470.63. 

As  we  find  that  both  parties  were  equally  at  fault,  we  decide  that 
one  half  of  said  amount  of  allowance,  or  $235.32  should  be  for  the 
account  of  each  party  at  interest  and  that  Seller  shall  pay  to  Buyer  the 
sum  of  $235.32  as  settlement  of  this  claim.  (San  Francisco  Chamber 
of  Commerce  Arbitration,  1920.) 

Meaning  of  Term  "Random"  Lengths  in  Lumber  Contract 
— Where  Contract  is  Impossible  of  Performance — Indefinite  and 
Uncertain  Contract— A  sold  to  B  about  100,000  feet  of  T  &  G  Doug- 
las Fir  Flooring  at  $41  per  M  feet,  and  the  same  quantity  of  Douglas 
Fir  Channel  Rustic  at  $45  per  M  feet.  Subsequently  Seller,  at  the 
request  of  Buyer,  furnished  an  additional  quantity  of  Flooring  and 
Rustic  to  make  up  a  full  cargo. 

The  contract  itself  was  indefinite,  in  that  there  was  first  a  verbal 
order,  a  written  confirmation  and  a  formal  confirmation  by  Seller, 
followed  by  a  formal  confirmation  of  the  order  by  Buyer.  There  was 
a  variance  in  the  term  as  to  the  lengths  of  lumber  to  be  furnished. 
The  original  verbal  order  called  for  lengths  10  to  24  feet.  In  Seller's 
confirmation  of  the  verbal  order  the  lengths  were  specified  as  random. 
In  the  formal  acknowledgment  of  the  order  the  lengths  were  set  forth 
as  "  10/24 '."     Two  points  were  in  dispute  namely: 


REPORTS  137 

First — Respecting  the  short  length  lumber  (under  10  feet)  which  was 
shipped. 

Second — Respecting  the  length  of  the  lumber  covered  by  the  original 
order,  i.e.,  whether  random  or  specified  lengths. 

Held,  That  the  generally  accepted  meaning  of  the  trade  terms 
"random"  and  "10/24'",  without  any  modifying  clauses,  are  synony- 
mous. 

In  the  formal  acknowledgment  appears  a  clause  stating  substantially 
that  if  the  acknowledgment  is  not  in  accordance  with  Buyer's  under- 
standing, immediate  attention  should  be  called  to  any  errors.  It  is  not 
in  evidence  that  attention  was  called  by  Buyer  to  any  error. 

The  formal  written  confirmation  of  order  by  the  Buyer,  however, 
contained  a  clause  covering  the  lengths  of  lumber,  different  from  that 
contained  in  the  acceptance  and  acknowledgment,  which  clause  was  as 
follows:  And  not  to  exceed  10%  of  each  length. 

No  particular  attention  was  called  by  Buyer  to  this  additional 
clause  but  it  is  in  evidence  that  Seller,  upon  receipt  of  the  confirmation, 
did  call  attention  to  the  discrepancy  and  particularly  to  the  fact  that  as 
the  order  then  read  it  was  not  possible  of  fulfillment  as  there  were  only 
eight  lengths  between  10  and  24  feet,  inclusive,  with  the  result  that  the 
order  would  be  only  80%  filled.  The  Buyer's  confirmation  had  been 
altered  by  having  a  pencil  line  drawn  through  the  above  mentioned 
clause  affecting  the  percentage  of  lengths,  but  this  alteration  was  not 
initialed  by  either  party. 

Due  to  the  conflicting  nature  of  the  testimony  introduced,  the 
Arbitrators  are  unable  to  determine  whether  or  not  this  alteration  was 
made  by  mutual  consent  of  both  parties,  but  inasmuch  as  the  clause 
specifying  and  not  to  exceed  10%  of  each  length  is  impossible  of  fulfillment, 
we  find  that  this  clause  must  be  disregarded. 

We  find  that  Seller  filled  the  order  in  accordance  with  the  conditions 
of  his  acceptance,  to  which  no  specific  exception  was  made  by  Buyer, 
and  also  in  accordance  with  the  formal  confirmation  of  the  order  by 
Buyer,  after  the  impossible  conditions  of  same  had  been  eliminated  ? 
excepting,  however,  as  hereinafter  noted. 

No  provision  in  the  order  or  acceptance  was  made  for  any  lengths 
of  Flooring  or  Rustic  shorter  than  10  feet,  of  which  9641  feet  were  even- 
tually shipped. 

The  Arbitrators  have  carefully  weighed  the  testimony  in  regard  to 
the  causes  that  led  to  the  short  lengths  being  shipped  and  find  that 
the  preponderance  of  evidence  indicates  that  an  agreement  had  been 
reached  covering  the  disposition  of  the  short  lengths. 


138  COMMERCIAL   ARBITRATION 

The  evidence  shows  that  the  error  was  discovered  by  the  Buyer  prior 
to  the  loading  of  the  vessel  and  that  Seller  had  noted  same  before  vessel 
was  loaded  and  before  Buyer  had  called  attention  to  same  and  had 
detailed  a  man  for  the  specific  purpose  of  either  laying  out  or  directing 
the  laying  out  of  the  short  lengths,  and  that  this  man,  after  working 
thereat  several  hours,  had  been  recalled.  Having  detailed  a  man  for 
the  specific  purpose  of  having  the  short  lengths  laid  out,  it  does  not 
appear  reasonable  that  he  would  have  been  recalled  unless  an  agreement 
had  been  reached  by  which  the  short  lengths  would  be  shipped,  which 
agreement  Seller  testifies  was  reached,  the  basis  being  an  allowance  of 
$8.00  per  thousand  for  short  lengths.  This  evidence  s  imaterially 
strengthened  by  a  certain  letter,  dated  June  10,  1920,  written  from 
Portland  by  a  representative  of  Seller  who  made  the  sale  for  Seller  to 
another  representative  of  the  same  company  in  which  he  confirms  the 
statements  and  verbal  testimony  introduced  by  the  Seller  before  the 
arbitrators.  We  decide  that  the  preponderance  of  evidence  shows 
that  an  agreement  had  been  reached  covering  the  short  lengths,  and 
that  an  allowance  of  $8.00  per  thousand  feet  was  to  be  made  by  Seller 
from  the  invoiced  price. 

In  conclusion  we  find  that  there  were  7440  feet  of  Flooring  under  10 
feet  in  length  shipped,  and  that  there  were  2201  feet  of  Rustic  under  10 
feet  shipped,  a  total  of  9641  feet,  and  we  decide  that  a  deduction  from 
the  invoice  shall  be  made  of  $8.00  per  thousand  on  the  above  quantity, 
and  that  Buyer  shall  pay  to  the  Seller  the  balance  due  on  his  invoice 
after  the  above  deduction  has  been  made  and  that  said  payment,  when 
made,  shall  constitute  full  settlement  of  all  claim  in  this  case. 

We  disallow  Buyer's  claims  for  allowance  for  alleged  disproportion- 
ment  of  deliveries  under  the  lengths  ordered  and  for  freight  on  the  short 
lengths.     (San  Francisco  Chamber  of  Commerce  Arbitration,  1920.) 


REPORTS  139 


Minimum  Carload 

There  is  a  variance  in  rules  covering  minimum  carload,  according 
to  the  trade  concerned.  The  rule  recognized  in  the  California  Bean 
trade  is  that,  in  the  absence  of  a  specific  clause  in  a  contract  fixing 
the  car  weight,  that  carrying  the  lowest  freight  rate  shall  obtain. 

The  rule  covering  general  commodities  of  the  Foreign  Commerce 
Association  is  as  follows: 

"Minimum  carload  shall  be  as  provided  for  by  railroad  tariff  and/or 
regulations  as  in  force  on  date  of  contract,  and  any  change  in  the 
minimum  shall  be  for  Buyer's  account."  (Foreign  Commerce  Asso- 
ciation Rule  No.  19). 

The  rule  covering  shipments  of  Vegetable  Oil  is  as  follows: 

"The  minmum  carload  shall  be  as  provided  for  by  the  joint  railway 
tariff  association  or  Government  regulation  as  in  force  on  date  of 
contract."  (Foreign  Commerce  Association  Rule  No.  268,  New  York 
Produce  Exchange  Rule  8,  Section  3). 

Buyer  of  Beans  Is  Entitled  to  Minimum  Weight  Car  to 
Secure  Lowest  Rate — Payment  of  Taxes — A  sold  B  "five  minimum 
cars  Choice  Recleaned  California  Lima  Beans,  Crop  1918,  F.  A.  Q. 
of  the  season."  Owing  to  the  fact  that  the  railroad  tariffs  provide  for 
two  minimums  in  the  case  of  bean  shipments,  namely,  60,000  pounds 
and  40,000  pounds,  respectively;  the  40,000-pound  minimum  carrying 
a  slightly  higher  rate  of  freight  than  the  freight  charge  on  the  60,000- 
pound  minimum,  a  dispute  arose  between  Buyer  and  Seller.  Buyer 
contended  that  in  the  absence  of  any  reference  in  the  contract  as  to 
which  minimum  car  was  intended  to  be  covered  by  the  contract,  he 
was  entitled  to  demand  delivery  of  five  40,000-pound  minimum  cars. 
Seller  insisted  that  he  was  entitled  to  deliver  cars  having  a  carrying 
capacity  of  60,000  pounds.  Seller  also  contended  that  as  the  law  of 
California  provides  that  taxes  shall  be  assessed  on  goods  on  the  owner's 
possession  on  the  first  Monday  in  March  and  as  Buyer  had  unduly 
delayed  giving  shipping  instructions  on  the  cars  so  that  Seller  was 
obliged  to  pay  taxes  on  the  beans  that  he  was  entitled  to  be  reimbursed 
for  the  amount  of  taxes.  The  contract  called  for  shipment  the  "last 
week  of  February"  and  Buyer  gave  shipping  instructions  February  27th. 


140  COMMERCIAL   ARBITRATION 

Held,  That  carelessness  was  shown  on  both  sides  in  drawing  the 
contract  in  not  specifically  designating  the  40,000-pound  minimum 
if  such  was  intended  or  desired  by  either  party,  but  in  the  absence  of 
such  designation  there  is,  and  at  all  times  within  the  knowledge  of  the 
Arbitrators  has  been,  an  established  trade  custom  that  where  no  mini- 
mum car  weight  is  specified  the  minimum  car  that  could  be  tendered 
and  should  be  accepted  was  the  car  that  carried  the  lowest  freight 
rate.  This  custom  is  so  well  established  and  understood  that  if  any 
other  car  weight  was  desired  it  should  and  must  be  designated  at  the 
time  the  contract  was  made  or  the  sale  entered  into. 

As  to  the  question  of  responsibility  for  payment  of  taxes: 

Held,  That  the  Buyer,  in  waiting  until  the  next  to  the  last  day  of 
February  to  tender  his  shipping  instructions,  was  guilty  of  negligence, 
Seller  is  unquestionably  entitled  to  be  reimbursed  for  whatever  sum 
the  taxes  upon  these  beans  may  represent.  (California  Bean  Dealers 
Association  Arbitration  No.  28,  1919). 


REPORTS  141 


Mistak< 


The  general  rule  is  that  arbitrators  will  not  compel  performance  of 
contract  conditions  manifestly  made  by  the  parties  through  a  mistake 
or  misunderstanding.  In  commerce,  as  well  as  in  law,  there  must  be 
mutuality  in  a  contract. 

When  it  is  clear  that  at  no  time  did  the  minds  of  the  parties  meet 
upon  a  definite  proposition  covering  the  sale  and  purchase  of  Prunes, 
arbitrators  will  not  compel  delivery  of  the  goods.  (Dried  Fruit  Asso- 
ciation of  California  Arbitration  No.  2,  1911,  Page  141). 

Where  the  parties  enter  into  negotiations  by  cable  for  a  shipment 
of  Copra  and  outward  freight  in  a  sailing  vessel,  a  conflict  in  their 
respective  understandings  due  to  ambiguity  in  the  cable  correspondence 
will  cause  arbitrators  to  put  aside  the  entire  proposition  as  having  been 
founded  in  a  mistake.  (San  Francisco  Chamber  of  Commerce 
Arbitration,  1920,  Page  142). 

When  a  broker  verbally  negotiated  the  sale  and  purchase  of  Sugar 
duty  paid  ex  dock  San  Francisco  and  the  Seller  subsequently  presented 
a  contract  to  Buyer  for  his  signature  containing  the  customary  clause 
in  import  contracts,  namely,  any  change  in  present  duty  shall  be  for 
account  of  Buyer,  arbitrators  refused  to  consider  a  custom  of  trade 
binding  upon  either  party  when  formal  contract  had  not  been  signed. 
(San  Francisco  Chamber  of  Commerce  Arbitration  on  Appeal,  1921, 
Page  145). 

When  a  contract  covering  Lumber  specifies  random  lengths  (the 
term  random  meaning  lengths  10  to  24  feet)  and  the  further  provision, 
not  to  exceed  10  per  cent  of  each  length,  arbitrators  will  disregard  that 
feature  of  the  contract  calling  for  only  10  per  cent  of  each  length,  for 
the  reason  that  there  are  only  eight  lengths  between  10  to  2  •  feet,  and 
that  provision  of  the  contract  therefore  is  impossible  of  fulfillment. 
(San  Francisco  Chamber  of  Commerce  Arbitration,  1920,  Page  136). 

Failure  of  Minds  to  Meet — Misunderstanding  Arising  Out 
of  Cable  Contract — A,  a  California  packer,  and  B,  a  London  merchant, 
exchanged  a  series  of  cablegrams  relative  to  the  sale  and  purchase  of  a 
quantity  of  Prunes.  No  deliveries  or  payment  of  money  resulted 
from  this  correspondence,  and  the  parties  submitted  the  controversy 
that  arose  therefrom  to  arbitration  before  the  Dried  Fruit  Association 
of  California.  The  case  is  interesting  only  because  it  illustrates  how 
easily  a  misunderstanding  may  follow  negotiations  by  cable  between 


142  COMMERCIAL  ARBITRATION 

international  merchants,  and  not  because  any  vital  principle  of  trade 
is  settled  by  the  arbitrament;  unless  it  is  that  it  be  understood  the 
first  essential  of  business  is  that  there  shall  be  a  meeting  of  minds 
between  Buyer  and  Seller,  and  that  a  contract  entered  into  by  cable 
shall  unmistakably  express  the  exact  understanding  of  the  parties. 

The  first  cable  was  an  offer  to  purchase  a  quantity  of  Prunes  at 
a.  named  price,  and  was  answered  by  a  counter-proposal,  naming  a 
higher  price.  B  responded  to  this  offer  in  a  cablegram  that  was  garbled 
in  transmission.  From  then  on  the  parties  seemed  to  have  been  hope- 
lessly muddled  and  there  followed  seventeen  additional  cablegrams, 
two  of  which  were  a  repetition  of  the  message  originally  garbled  and 
were  delivered  without  correction  as  to  the  unintelligible  portion 
thereof.  The  result  of  all  this  misunderstanding  was  that  B  made 
claim  for  his  losses  alleged  to  be  due  to  A's  failure  to  ship  the  goods. 

Held,  That  while  the  whole  matter  is  very  complicated,  it  is  clear 
to  us  that  at  no  time  did  the  minds  of  the  principals  meet  upon  a 
definite  proposition,  and  therefore  A  is  not  required  to  deliver  goods 
to  B,  who  must  bear  any  loss  incurred.  (Dried  Fruit  Association  of 
California  Arbitration  No.  2,  1911). 

Failure  of  Minds  to  Meet — Indefinite  Cablegrams — Messages 
Must  be  Read  Together  and  Not  Separately  as  Explaining 
Meaning  of  Parties — A  merchant  at  Apia,  Samoa,  and  a  Pacific 
Coast  merchant  exchanged  a  number  of  cablegrams  in  relation  to  the 
charter  of  a  vessel  for  Copra.  The  transaction  had  its  inception  in 
1918,  and  involved  the  charter  of  the  vessel  as  well  as  the  sale  of  copra 
to  be  shipped  in  said  vessel. 

October  31st  Seller  despatched  an  offer  to  sell  not  in  excess  of  600 
long  tons  copra.  This  message  was  received  by  Buyer  November  4th. 
The  Buyer  assumed  that  Seller  had  sold  him  enough  copra  to  fill  a 
vessel  but  not  in  excess  of  600  long  tons.  The  Buyer  procured  a 
vessel  of  175  tons  cubic  measurement. 

The  matter  then  went  to  arbitration,  and  was  subsequently  appealed, 
the  ultimate  decision  of  the  arbitrators  on  appeal  being  that  there 
actually  had  been  no  meeting  of  the  minds  of  the  parties,  therefore  no 
contract  executed  between  them. 

The  original  arbitrators,  however,  held  otherwise,  their  decision, 
given  herewith,  revealing  the  complication  that  arose  as  a  result  of 
indefinite  cablegrams.     The  original  arbitrators  said : 

"Buyer  had  the  right  to  assume  from  the  wording  of  the  cable  of 
October  31st,  reading  What  is  estimated  capacity  vessel  for  bulk  Copra. 


REPORTS  143 

Confirm  sale  if  not  in  excess  of  600  long  tons,  that  Seller  had  sold  him 
enough  Copra  to  fill  the  vessel,  but  not  in  excess  of  600  long  tons. 

"From  Seller's  letters  received,  however,  after  the  transaction  had 
been  completed  by  cable,  it  seems  that  Seller  intended  to  convey  the 
idea  by  his  cable  of  October  31st  that  he  confirmed  sale  of  500  to  600 
tons  copra,  if  not  in  excess  of  600  tons.  The  cable,  however,  does  not 
say  this  and  we  feel  Buyer  was  justified  in  reading  the  cable  to  mean 
that  Seller  had  on  hand,  or  could  furnish,  any  amount  of  copra  up  to, 
but  not  exceeding  600  tons. 

"We  feel  that  Seller  acted  in  good  faith  in  this  transaction,  as  shown 
by  his  letters,  but  these  letters  were  not  received  by  Buyer  until  too 
late  and  the  Committee  can  only  consider  cables  exchanged,  as  these 
closed  the  transaction. 

"We  consider  that,  notwithstanding  the  cables  which  went  before, 
Seller's  cable  of  October  31st  and  Buyer's  reply  of  November  8th 
constitute  the  offer  and  acceptance  and  constitute  a  contract  for  the 
purchase  of  the  copra  and  the  arrangement  for  downward  freight. 

"Seller  claims  he  cancelled  his  offer  of  October  31st  by  his  cable  of. 
November  9th,  reading  Copra  offer — no  reply  received,  please  cancel, 
but  it  is  pointed  out  that  previous  to  receipt  of  this  cable  Buyer  had 
on  November  8th,  cabled  his  firm  acceptance  and,  therefore,  Seller 
could  not  withdraw  and,  as  a  matter  of  fact,  Seller  did  eventually 
furnish  the  cargo. 

"It  is  also  pointed  out  that  in  Seller's  letter  to  Buyer,  dated  December 
21,  1918,  he  stated  he  received  on  November  7th,  Buyer's  letter  of 
October  21st  in  which  Buyer  advised  Seller,  We  have,  however,  secured 
vessel  of  175  tons  cubic  measurement,  which  we  have  offered  you  by  cable, 
as  per  enclosed  copy. 

"This  cable  was  as  follows:  Schooner  hundred  seventy  five  tons  can  fix 
round  trip  you  arrange  downward  cargo  will  purchase  Copra  basis  yours 
sixth  freight  thirty-two  fifty  early  November. 

"Seller  received  this  cable  on  October  22nd  and  as  the  letter  of 
October  21st,  received  November  7th,  plainly  stated  the  vessel's 
capacity  to  be  175  tons  cubic  measurement,  he,  therefore,  had  knowledge 
of  the  size  of  the  vessel  before  he  sent  his  cable  of  November  9th  cancel- 
ling his  offer,  as  he  states,  on  account  of  having  received  no  reply  to 
his  cable  of  October  31st,  asking  capacity  of  vessel. 

"We  decide  that  downward  freight,  together  with  dead  freight,  paid 
the  vessel  by  Buyer,  as  per  statement  of  Buyer  dated  December  24, 1918, 
amounting  to  $1,582.85,  is  for  account  of  Seller.  We  disallow  Buyer's 
claim  for  $1,036.31  expenses  incurred  by  him  in  this  transaction.  In 
reference  to  the  item  of  $694.01  for  demurrage  and  cable  expanse  in 


144  COMMERCIAL   ARBITRATION 

that  claim,  there  is  no  evidence  to  show  that  Seller  obligated  himself 
to  pay  any  specified  sum  for  delay  or  that  he  was  in  default  in  loading, 
and  it  is  clear  that  these  expenses  were  due  to  delay  in  Buyer's  arrange- 
ments for  credits  and  for  payment  by  him  of  charges  against  vessel  at 
Apia. 

"We  decide  that  Buyer  was  only  required  to  receive  copra  up  to  the 
capacity  of  the  schooner,  which  for  175  tons  cubic  measurement  would 
be  for  about  90  tons  bulk  cargo,  and  it  is  shown  that  about  90  tons  were 
loaded.  We,  therefore,  disallow  Seller's  claim  for  loss  of  20  tons  addi- 
tional copra. 

"We  disallow  Seller's  claim  for  various  expenses  as  itemized  in  his 
statement  of  May  12,  1919,  except  item  (g)  for  £9-6-9  for  interest  on 
purchase  money  for  89  T.  12C.  2Q.  14  lbs.  Copra,  £2240-15-8,  from 
April  9th  till  April  28th  at  8  per  cent,  which  claim  we  allow. 

"Summing  up  we  decide: 

"First— That  Seller  shall  allow  Buyer  the  sum  of  $1,582.85  for 
downward  freight  and  for  dead  freight. 

"Second — That  Buyer  shall  allow  Seller  £9-6-9  for  interest  on 
purchase  money  for  the  Copra  delivered.  And  that  said  allowances, 
when  made,  shall  constitute  full  settlement  of  all  claims  in  this  case. 
(San  Francisco  Chamber  of  Commerce  Arbitration,  1919.) 

Reversed  on  Appeal — No  Contract  Existed  Between  Parties — 

The  matter  went  to  appeal,  the  arbitrators  on  appeal  saying: 

"It  is  clear  to  the  Arbitrators  on  appeals  that  the  cable  from  Seller 
to  Buyer,  dated  October  31st,  must  read  in  connection  with  Seller's 
preceding  cables,  and  it  cannot  be  taken  alone.  We  find  that  Buyer's 
cables  were  indefinite,  notwithstanding  Seller's  request  for  more  explicit 
information  as  to  the  amount  of  copra  Buyer  was  prepared  to  purchase, 
and  that  Seller  in  sending  his  cable  of  October  31,  1918,  had  in  mind  his 
previous  two  cables  offering  500  to  600  tons.  That  while  Seller  in  his 
cable  of  October  31st  agreed  to  sell  to  Buyer  a  quantity  of  bulk  copra, 
if  not  in  excess  of  600  tons,  at  £25,  F.  O.  B.  Apia,  he  unquestionably 
had  in  mind,  as  per  his  previous  cables,  an  amount  of  500  to  600  tons, 
and  in  that  cable  he  again  asked  for  the  quantity  Buyer  would  take  and 
stated  that  he  would  arrange  for  175  tons  of  downward  cargo,  provided 
a  satisfactory  credit  was  cabled  to  the  Bank  of  New  Zealand  and  that 
he  would  wire  an  order  on  receipt  of  confirmation.  Said  credit  satis- 
factory to  Seller  was  not  furnished,  and  Seller  cancelled  by  his  cable 
of  November  9th  his  previous  offer. 

"It  is  also  clear  that  Buyer  had  in  mind  the  purchase  of  only  a  small 
lot  of   copra  that  would  fill  a  vessel  of  175  tons,  although  his  cables 


REPORTS  145 

do  not  state  what  kind   of  tonnage  was  referred  to  and  what  would  be 
the  amount  of  copra  taken. 

"It  is  clear  to  this  Committee  that  the  minds  of  the  parties  at  no 
time  met  in  this  transaction  and  we,  therefore,  reverse  the  decision  of 
the  Arbitration  Committee  and  decide  that  no  contract  exists  or  existed 
between  the  parties.  There  being  no  contract  between  the  parties,  we 
decide  there  can  be  no  claim  allowed  for  expenses  incurred  by  either  in 
this  transaction. 

"We  decide  that  Buyer  shall  refund  to  Seller  the  sum  of  $1582.25, 
which  Buyer  held  out  from  the  price  he  agreed  to  pay  Seller  for  approxi- 
mately 90  tons  of  copra  eventually  purchased  by  him  from  Seller. 
(San  Francisco  Chamber  of  Commerce  Arbitration  on  Appeal,  1920.) 

Meaning  of  Term  "  Duty  Paid  "  in  Event  of  Increase  in 
Duty — Where  One  Party  Misunderstood — Application  of  Trade 
Custom  Reversed  on  Appeal — A  sold  to  B,  through  a  broker,  750 
tons  white  Central  American  Sugar,  duty  paid,  delivered,  ex  dock 
San  Francisco.  A  dispute  arose  as  to  whether  the  duty  in  force  at  date 
of  contract,  namely  Feb.  18,  1921,  applied,  or  whether  any  change  in 
the  effective  duty  was  for  Buyer's  account.  Buyer  contended  that  he 
returned  the  contract  unsigned  to  the  Seller  and  notified  him  that  it 
should  be  made  out  in  accordance  with  the  terms  of  the  original  offer 
and  purchase,  maintaining  that  the  term  duty  paid  meant  any  change  in 
duty  after  the  date  of  the  contract  should  be  for  Seller's  risk  and  account. 
Seller  insisted  that  it  is  usual  for  importers'  contracts  specifying  duty 
paid  to  contain  the  customary  clause  that  any  change  in  duty  shall  be 
for  Buyer's  account,  and  this  being  so  well  understood  by  the  trade 
that  offers  for  sale  of  goods  duty  paid  are  always  understood  to  be 
subject  to  that  clause  being  contained  in  the  contract  when  it  is  sub- 
sequently presented,  and  that  being  so  understood  and  intended  when 
making  the  original  offer  through  his  broker.  Thus  the  question  under 
submission  was  whether  an  increase  in  duty  was  for  the  account  of 
Buyer  or  Seller. 

Held,  That  in  the  absence  of  any  written  agreement  between  Buyer 
and  Seller  in  this  case  setting  forth  the  exact  terms  under  which  the 
sugar  was  being  negotiated  for,  we  find  that  trade  custom  shall  prevail 
in  the  matter  of  change  of  duty.  In  view  of  the  fact  that  it  has  been 
the  custom  of  the  trade  in  the  import  business  to  be  done  on  the  basis 
of  any  change  in  duty  to  be  for  the  Buyer's  account,  and  because  of  the 
fact  that  Buyer  in  this  case  did  not  object  to  this  when  accepting  ver- 
bally the  verbal  offer  from  Seller's  broker,  we  find  that  the  term  duty 
paid  in  this  case  is  to  be  taken  in  conjunction  with  the  clause  customarily 


146  COMMERCIAL   ARBITRATION 

contained  in  importers'  contracts  covering  any  change  in  duty,  which 
clause  provides  that  any  change  in  duty  shall  be  for  Buyer's  account. 
We  decide  that  if  there  should  be  any  change  in  duty  on  the  sugar 
in  question,  said  change  shall  be  for  account  of  Buyer.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1921.) 

Reversed  on  Appeal — Failure  of  Minds  to  Meet — No  Con- 
tract— The  matter  was  appealed  by  Buyer  on  the  ground  that  error 
was  committed  by  the  arbitrators. 

Held,  That  the  minds  of  the  two  parties  at  interest  never  met  on 
the  question  of  the  meaning  of  the  term  duty  paid  when  the  verbal 
offer  was  made  and  verbally  accepted,  which  is  further  evidenced  by  the 
fact  that  no  contract  has  been  signed  by  both  parties. 

Therefore,  we  decide  that  no  contract  between  the  parties  was  ever 
consummated  for  the  purchase  and  sale  of  the  particular  lot  of  sugar 
in  question. 

We  reverse  the  decision  of  the  Arbitration  Committee  in  this  case, 
as  in  our  judgment  neither  party  can  compel  the  other  to  carry  out  a 
contract  that  was  never  consummated.  (San  Francisco  Chamber  of 
Commerce  Arbitration  on  Appeal,  1921.) 


REPORTS  147 


Refrigeration 


Payment  of  Refrigeration  Charges  on  Coconut  Oil  Under 
F.  O.  B.  New  York  Contract — Refrigeration  a  Special  Service 
— Not  a  Part  of  Freight  Tariff — A  Pacific  Coast  importer  sold  900 
tons  of  Coconut  Oil  in  barrels  to  a  New  York  manufacturer.  The 
oil  was  to  be  shipped  from  Manila  to  the  Pacific  Coast  and  transhipped 
to  New  York  during  a  period  between  February  and  July,  inclusive, 
if  possible,  F.  O.  B.  New  York.  The  sale  was  based  on  the  effective 
Transcontinental  Freight  Tariff,  any  changes  therein  to  be  for  Buyer's 
account.  A  portion  of  this  oil,  namely  2,753  barrels,  was  shipped  from 
the  Pacific  Coast  to  New  York  in  August  and  September,  and  was 
accepted  by  Buyer.  Seller  made  these  shipments  under  refrigeration, 
charging  the  cost  thereof,  $2,201.68,  to  Buyer,  claiming  that  the  carrier 
would  not  accept  the  coconut  oil  for  shipment  in  barrels  in  box  cars 
during  the  summer  months,  and  required  it  to  move  under  refrigeration. 
Seller  further  claimed  that  he  could  not  obtain  tank  cars  at  that  time. 

Buyer  declined  to  pay  the  refrigeration  charges,  claiming  that  the 
Southern  Pacific  Lines  did  not  refuse  to  ship  such  oil  in  barrels  in  box 
cars  at  any  time  provided  the  barrels  were  in  satisfactory  condition 
to  the  inspector  and  that  Buyer  would  have  furnished  Seller  with 
plenty  of  tank  cars  free  of  cost,  if  notified  he  desired  same.  That 
refrigeration  not  being  compulsory,  and  the  price  made  being  F.  0.  B. 
New  York,  any  extra  charges  for  transportation,  other  than  changes 
in  the  overland  freight  tariff,  should  be  for  Seller's  account. 

The  arbitrators  were  advised  in  writing  by  the  superintendent  of 
transportation,  U.  S.  Railroad  Administration,  Southern  Pacific  Lines, 
that  shipment  of  coconut  oil  in  barrels  in  ordinary  box  cars  during 
July,  August  and  September,  1918,  was  not  refused  by  the  railroad, 
provided  the  containers  of  the  oil  were  in  proper  condition;  also  that 
no  discrimination  was  exercised  by  the  railroad  between  through 
shipments  from  the  Orient  of  such  oil  and  shipments  originating  on 
the  Pacific  Coast,  provided  the  containers  were  in  satisfactory  con- 
dition. It  was  shown  that  during  the  months  of  July,  August  and 
September,  1918,  the  following  amounts  of  coconut  oil  were  shipped 
from  San  Francisco  to  points  east  of  the  Missouri  River:  Loaded  in 
box  cars,  eight  (8)  cars;  loaded  in  refrigerated  cars,  seventy-four  (74) 
cars.  That  the  coconut  oil  loaded  in  refrigerated  cars  was  so  shipped 
because  the  barrels  in  which  it  was  contained  were  not  in  condition  prop- 
erly to  retain  the  oil  without  this  added  protection.  That  the  oil  that 
was  shipped  in  box  cars  was  in  better  quality  of  barrels  as  indicated 


148  COMMERCIAL   ARBITRATION 

by  inspection  before  shipments  were  accepted,  and  it  was  considered 
that  they  were  suitable  barrels  to  transport  the  oil  as  otherwise  they 
would  not  have  been  accepted  for  forwarding  in  ordinary  box  cars. 

As  regards  certain  letters  filed  by  the  Seller  with  the  arbitrators 
from  various  firms  in  San  Francisco,  in  which  it  was  claimed  that  the 
railroad  company  had  refused  to  accept  shipments  of  coconut  oil 
during  the  summer  months  for  forwarding  in  barrels  in  ordinary  box 
cars,  no  proof  was  submitted  that  the  barrels  in  these  particular  lots 
were  in  a  condition  satisfactory  to  the  railroad  inspector. 

Later  information  furnished  the  arbitrators  shows  that  the  barrels 
in  some  of  these  shipments  were  not  in  good  condition  and  were  refused 
shipment  in  ordinary  box  cars  on  that  account. 

Had  the  oil  in  question  been  shipped  before  July  1st  presumably 
no  difficulty  would  have  arisen  in  regard  to  shipment  in  box  cars  on 
account  of  possible  leakage.  Not  being  able  to  ship  prior  to  that  time, 
Sellers  had  the  choice  of 

(a)  Furnishing  containers  satisfactory  to  the  railroad  inspector,  or 

(b)  Finding  tank  cars  and  shipping  in  them,  provided  Buyer 
was  notified  in  advance  and  agreed  to  accept  delivery  in  tank  cars 
instead  of  in  barrels,  or 

(c)  Shipping  in  barrels  under  refrigeration. 

Seller  without  notifying  Buyer  and  giving  him  an  alternative, 
chose  to  ship  under  refrigeration. 

The  railroad  tariff  shows  that  refrigeration  is  a  special  service  by 
the  railroad  and  specifies  that  an  extra  charge  is  made  therein  for  this 
service,  which  is  not  included  in  the  regular  overland  freight  rate, 
and  hence  this  extra  charge  must  be  paid  either  by  the  shipper  or  the 
consignee  in  addition  to  the  regular  freight  rate. 

As  Seller  sold  F.  O.  B.  New  York  he  was  bound  to  deliver  the  oil 
there  at  contract  price  unless  present  overland  freight  tariff  was 
changed,  and  it  is  not  claimed  that  this  was  the  case,  or  unless  Buyer 
agreed  to  assume  any  extra  charges  for  shipping  in  some  special 
manner  agreed  to  by  him  prior  to  shipment.  Buyer  cannot  be  held 
responsible  in  this  case  for  the  extra  cost  to  Seller  in  shipping  this  oil 
from  the  Pacific  Coast  to  New  York  without  notifying  Buyer  and 
having  an  understanding  in  advance  regarding  payment  of  said  extra  cost. 

Held,  That  as  Seller  sold  F.  O.  B.  New  York,  he  was  bound  to 
deliver  the  oil  there  at  contract  price  unless  freight  tariff  effective  at 
time  of  contract  was  changed,  and  Buyer  is  not  required  to  pay  for 
shipment  under  refrigeration.  (San  Fiancisco  Chamber  of  Commerce 
Arbitration,  1919). 


REPORTS  149 


Rejection 


The  general  rule  in  the  business  of  importing  is  that  rejection  of 
goods  by  Buyer,  if  accepted  by  Seller,  shall  constitute  delivery,  i.  e., 
Seller  and  Buyer  by  agreement  thereby  rescind  the  contract,  the  one 
being  released  from  making  any  delivery  thereunder  and  the  other 
released  of  his  obligation  to  take  and  pay  for  the  goods. 

Rejection  Constitutes  Delivery — Rejection,  if  accepted  by  Seller, 
shall  constitute  delivery.    (Foreign  Commerce  Association,  Rule  15). 

Rejection  Must  Be  for  Cause — But  the  rejection  must  be  for 
cause  and  the  party  making  it  must  substantiate  his  adverse  claims. 
If  rejection  be  for  alleged  inferior  quality,  such  inferior  quality  must 
be  established  by  disinterested  inspection  and  determination;  or  if 
made  on  the  ground  of  delayed  delivery,  or  failure  to  ship  within  the 
contract  period,  or  insufficiency  of  documents,  or  any  default  of  the 
party  charged  under  the  contract,  such  conditions  as  alleged  must  be 
substantiated  and  justified.  The  rule  is  different,  however,  when  a 
contract  specifies  Buyer's  inspection  and  acceptance.  This  has  been 
held  to  be  an  option  sale,  conditioned  upon  the  Buyer's  inspection  and 
acceptance  of  the  goods.  He  may  or  may  not  be  justified  in  objecting 
to  the  quality,  but  under  such  a  clause  he  is  the  sole  and  final  judge. 

Inasmuch  as  the  so-called  rejection  clause  is  one  of  the  most  import- 
ant and  far-reaching  provisions  of  contracts  the  discussion  thereof  should 
be  extensive  and  in  the  light  of  many  awards  of  arbitrators  on  this  vital 
point.  Virtually  every  arbitrament  involves  a  rejection.  Occasionally 
a  Buyer  may  demand  an  allowance  on  the  price  to  be  made  by  Seller, 
but  usually  a  Buyer  objecting  to  the  quality  of  goods,  time  of  shipment, 
insufficiency  of  documents,  improper  packing,  or  any  other  of  the  many 
causes  of  dispute,  rejects  the  tender  outright.  If  the  rejection  is  uncon- 
tested, the  contract  under  which  the  parties  had  been  bound  auto- 
matically is  cancelled  and  neither  party  is  obligated  to  perform  further 
thereunder.  But  if  the  rejection  is  not  accepted  unconditionally  by 
Seller,  there  is  no  rescission  of  the  contract.  This  follows  the  rule  of 
law  that  a  contract  cannot  be  rescinded  by  one  party  thereof.  The 
aggrieved  party  may  treat  a  breach  of  contract  as  cause  for  rescission 
but  there  must  be  recourse  to  some  tribunal  or  authority  higher  than 
the  mere  will  of  the  party.  The  aggrieved  party  may  begin  a  legal 
action  for  damages  arising  from  the  breach,  or  he  may  follow  ths  custom 
of  enlightened  merchants  and  submit  his  dispute  to  the  impartial 
judgment  of  arbitrators. 


150  COMMERCIAL   ARBITRATION 

Rejection   for   Fraud,    Deception   and   Gross   Carelessness — 

While  in  the  world  of  trade  outright  rejection  is  discouraged,  fraud, 
deception  or  gross  carelessness  on  the  part  of  the  Seller  are  grounds 
for  outright  rejection  well  recognized  and  generally  accepted  and 
applied  in  all  trades,  and  arbitrators  are  quick  to  penalize  a  Seller 
guilty  thereof. 

Buyer's  Option  of  Rejection  or  New  Tender  for  Inferior 
Quality  of  California  Beans — The  California  Bean  Dealers  Associa- 
tion Uniform  California  Bean  contract  is  specific  as  to  rejection  for 
inferior  quality.  The  California  Bean  Dealers  Association  established 
a  fixed  standard  as  to  quality  as  follows : 

"Choice  Recleaned:  To  contain  not  less  than  98  per  cent 
sound  merchantable  beans  and  not  over  2  per  cent  damaged, 
discolored  or  other  beans,  splits,  adobe,  or  other  foreign  matter; 
and  in  no  case  more  than  1  per  cent  damaged  beans.  (This 
standard  shall  be  permanent  and  in  no  way  altered  from  year 
to  year,  and  all  sales  and  shipments  made  thereunder  must  not 
vary  therefrom  in  excess  of  1  per  cent)." 

The  same  contract  contains  this  clause : 

"If  arbitrators  find  variation  in  excess  of  one  (1)  per  cent 
from  standards  herein  above  named,  buyer  shall  be  entitled, 
within  the  time  specified  in  findings,  at  his  option,  to  outright 
rejection,  another  tender  or  such  allowance  as  arbitrators  may 
fix." 

It  will  thus  be  seen  that  the  Buyer  has  the  option  of  outright  re- 
jection, another  tender  or  an  allowance  to  be  fixed  by  arbitration. 
This  is  a  departure  from  the  "rejection  constitutes  delivery"  clause  in 
import  contracts  to  this  extent  at  least:  If  a  buyer  rejects  goods  ten- 
dered and  his  rejection  be  sustained  by  arbitrators,  he  is  entitled  to 
another  tender  if  he  so  elects.  The  rule  of  the  California  Bean  Deal- 
ers Association  is  that  a  buyer  must  elect  his  option  immediately  on 
notice  of  the  award. 

"Rejection  Constitutes  Delivery"  Clause  Not  in  Vegetable 
Oil  Uniform  Rules — This  likewise  is  substantially  the  situation  in 
the  Vegetable  Oil  trade.  Until  the  Vegetable  Oil  trade  rules  were  made 
uniform  by  agreement  between  the  New  York  Produce  Exchange, 
the  Interstate  Cottonseed  Crushers'  Association  and  the  Foreign 
Commerce  Association  of  the  Pacific  Coast  (May  23,  1920),  Pacific 
Coast  oil  contracts  contained  the  rejection  constitutes  delivery  clause; 
but  by  the  uniform  rules  jointly  established  by  the  three  organizations 


REPORTS  151 

named  herein,  outright  rejection  is  permitted  only  for  a  limited  number 
of  reasons. 

Rejection  of  Vegetable  Oil,  if  sustained  by  arbitration,  does  not 
release  Seller  from  his  contractual  obligation,  but  he  is  bound  to  fulfill 
his  contract. 

Rejection  of  Vegetable  Oil  for  failure  to  declare  name  of  vessel 
was  not  sustained.  (Foreign  Commerce  Association  Arbitration  No.  5, 
1919,  Page  100). 

Rejection  of  Chinese  Ungraded  Peanuts  because  Seller  did  not 
give  notice  of  arrival  of  goods  until  several  weeks  had  elapsed  was  not 
sustained.  (Importers  and  Exporters  Association  Arbitration  No.  1, 
1918,  Page  105). 

Rejection  of  Japanese  Beans  because  Seller  delayed  tender  of  de- 
livery order  several  weeks  after  vessel  arrived  was  not  sustained,  Seller 
having  shown  that  the  delay  was  beyond  his  control,  the  vessel  having 
been  aground  and  her  cargo  subsequently  discharged  in  a  disorderly 
manner  and  remained  in  the  custody  of  the  underwriters.  (Importers 
and  Exporters  Association  Arbitration  No.  6,  Page  106). 

Rejection  of  a  delivery  of  Walnut  Meats  was  sustained  under  an 
interpretation  of  a  clause  in  the  contract  providing  for  Buyer's  in- 
spection and  acceptance.  (Foreign  Commerce  Association  Arbitration 
No.  26,  1919,  Page  37). 

Rejection  of  Vegetable  Oil  to  be  delivered  in  oak  and  fir  barrels 
mixed  because  not  so  tendered  was  not  sustained,  but  Seller  was 
directed  to  recooper  a  sufficient  amount  of  the  oil  into  oak  barrels  as 
to  make  the  delivery  50  per  cent  in  oak  and  50  per  cent  in  fir  barrels. 
(Foreign  Commerce  Association  Arbitration  No.  5,  1919,  Page  100). 

Rejection  by  Buyer  of  a  quantity  of  Kotenashi  Beans  on  account 
of  quality,  accepted  by  Seller,  was  sustained,  and  Seller's  attempt 
to  make  a  new  tender  was  disallowed  because  of  an  express  limitation 
in  the  contract.  (California  Bean  Dealers  Association  Arbitration 
No.  12,  1920,  Page  250). 

Rejection  by  Buyer  of  two  tank  cars  Soya  Bean  Oil  sold  for  June 
shipment  from  Pacific  Coast  on  the  ground  that  tender  was  not  made 
in  June  was  not  sustained  since  contract  covered  June  shipment,  not 
June  tender.  (Foreign  Commerce  Association  Arbitration  No.  23,  1920, 
Page  194). 

Rejection  of  a  quantity  of  Java  Peanuts  on  the  ground  that  they 
were  damaged  by  the  presence  of  weevil  was  not  sustained  under 


152  COMMERCIAL   ARBITRATION 

interpretation  of  a  clause  in  the  contract  requiring  Buyer  to  accept 
any  or  all  portions  of  the  goods  damaged,  with  an  allowance  to  be 
fixed  by  arbitration.  (Foreign  Commerce  Association  Arbitrations  Nos. 
21  and  21  A,  1920,  Page  77). 

Rejection  of  a  quantity  of  Korean- Japanese  Beans  because  of 
insufficiency  of  inspection  certificate  was  not  sustained,  Buyer  having 
paid  for  the  goods  and  claimed  an  allowance  in  accordance  with  Rule  13. 
(Foreign  Commerce  Association  Arbitration  No.  25,  1920,  Page  52). 

Rejection  of  Chinese  Shelled  Peanuts  on  the  ground  of  late  ship- 
ment was  not  sustained  when  it  was  shown  that  Buyer  had  cancelled 
as  to  a  portion  of  the  shipment  at  time  of  notice  of  delay  in  shipment 
and  had  consented  to  the  late  shipment  of  the  remainder  of  the  quantity 
under  contract.  (San  Francisco  Chamber  of  Commerce  Arbitration. 
1920,  Page  215). 

Rejection  of  a  quantity  of  Beans  for  delayed  shipment  under  a 
prompt  shipment  provision  in  the  contract  was  not  sustained  because 
shipping  instructions  were  not  received  until  5:51  P.  M.,  October  11th; 
October  12th  was  a  legal  holiday  and  October  13th  was  Sunday,  the 
arbitrators  holding  that  the  ten-day  period  allowed  for  prompt  shipment 
began  to  operate  October  14th  and  shipment  on  October  24th  complied 
with  prompt  shipment  requirement.  (California  Bean  Dealers  Associa- 
tion Arbitration  No.  16,  1918,  Page  198). 

Rejection  of  a  quantity  of  Beans  for  delayed  shipment  under  a 
contract  calling  for  immediate  shipment  was  sustained,  shipment  not 
having  been  made  immediate,  i.e.  within  five  full  business  days,  under  the 
terms  of  the  California  Bean  Dealers  Association  Uniform  Contract. 
(California  Bean  Dealers  Association  Arbitration  No.  19,  1918, 
Page  33). 

Rejection  of  a  quantity  of  Beans  bought  through  a  broker  on  the 
ground  that  Seller  did  not  comply  with  the  time  of  shipment  clause 
was  sustained,  and  arbitrators  held  that  the  Seller  was  wholly  responsible 
for  the  acts  of  the  broker,  within  the  scope  of  his  authority,  and  as  the 
broker  had  failed  properly  to  confirm  immediate  shipment,  the  fault 
was  Seller's  and  not  Buyer's.  (California  Bean  Dealers  Association 
Arbitration  No.  19,  1918,  Page  33). 

Rejection  of  Chinese  Shelled  Peanuts  purchased  for  January- 
February  shipment  from  the  Orient  because  the  vessel  on  which  shipped 
did  not  actually  sail  from  Kobe  until  March  15th,  was  not  sustained, 
Seller  having  adduced  proof  that  the  vessel  had  been  scheduled  to 
sail  on  February  27th,  but  was  delayed  on  account  of  engine  trouble. 
(Foreign  Commerce  Association  Arbitration  No.  9,  1920,  Page  193). 


REPORTS  153 

Rejection  of  Chinese  Shelled  Peanuts  purchased  under  a  contract 
specifying  "usual  packing",  on  the  ground  that  the  tender  was  of 
peanuts  packed  in  bags  weighing  180  pounds,  was  not  sustained,  the 
arbitrators  holding  that  when  shipped  from  Chinese  points  Peanuts 
packed  100  pounds  to  the  bag  are  no  more  "usual"  than  other  weights, 
namely,  200,  180,  160  and  100  pounds.  But  Seller  was  required  to  pay 
all  expenses  of  repacking  the  peanuts  into  100  pound  bags  if  Buyer  so 
required.  (Foreign  Commerce  Association  Arbitration  No.  13,  1920, 
Page  264). 

Rejection  of  Chinese  Shelled  Peanuts  not  accepted  by  Seller  nor 
acted  upon  by  him  for  a  period  of  twelve  days  was  not  sustained,  the 
arbitrators  holding  that  it  was  clearly  the  Buyer's  duty  to  have 
strengthened  his  position  properly  by  insisting  upon  a  prompt  specific 
acceptance  or  refusal  of  rejection.  (Foreign  Commerce  Association 
Arbitration  No.  13,  1920,  Page  264). 

Rejection  of  Chinese  Shelled  Peanuts  purchased  C.  I.  F.  Seattle 
on  a  contract  calling  for  January  shipment  from  Hongkong  because 
the  steamer  on  which  shipment  was  made  did  not  arrive  at  Hongkong 
until  February  9th  and  sailed  from  there  about  February  13th,  was  not 
sustained,  the  bill  of  lading  being  dated  in  January  and  Buyer  failing 
to  submit  proof  of  fraud  on  the  part  of  Seller  or  his  supplier  in  connection 
with  the  date  of  bill  of  lading,  nor  did  he  allege  any  such  fraud  or 
collusion  with  the  steamship  company.  (Foreign  Commerce  Associa- 
tion Arbitration  No.  14,  1920,  Page  193). 

Rejection  of  Dried  Fruit  under  contract  calling  for  shipment 
"first  half  October"  on  the  ground  that  vessel  did  not  sail  from  San 
Francisco  until  October  16th,  was  not  sustained,  Seller  having  shown 
that  vessel  was  actually  scheduled  to  sail  October  14th  and  that  her 
departure  was  delayed  by  congestion  of  cars  and  inability  to  complete 
loading  of  cargo  on  advertised  sailing  date;  also  that  bill  of  lading  was 
dated  October  14th.  (Dried  Fruit  Association  of  California  Arbitra- 
tion No.  228,  1914,  Page  189). 

Claim  for  rejection  (and  repayment)  of  500  bags  of  imported  Beans 
under  a  contract  calling  for  1,500  bags  on  the  ground  that  Seller  had 
delayed  delivery  of  the  500-bag  lot  was  not  sustained  for  the  reason 
that  Buyer  had  expressly  declared  he  was  in  no  hurry  for  delivery  at 
the  time  the  goods  arrived  at  port  of  entry.  (California  Bean  Dealers 
Association  Arbitration  No.  17,  1918J  Page  103). 

Rejection  of  two  shipments  of  Philippine  whole  Coconuts,  sold 
for  August  shipment  from  Manila,  under  C.  I.  F.  terms,  the  contract 


154  COMMERCIAL   ARBITRATION 

calling  for  "5  per  cent  of  rottage  for  the  account  of  Seller/ '  on  the 
ground  that  virtually  the  entire  first  shipment  arrived  rotten  and  that 
the  subsequent  shipment  of  a  separable  lot  was  not  made  in  August, 
was  not  sustained,  but  Buyer  was  required  to  take  delivery  of  a  small 
portion  of  the  nuts  found  to  be  sound,  and  to  pay  for  5  per  cent  ex- 
pressly covered  by  the  "rottage"  clause.  It  was  further  held  that  the 
subsequent  shipment  was  justified  by  reason  of  the  failure  of  the  first 
carrier  to  take  all  the  cargo  tendered.  (Foreign  Commerce  Association 
Arbitration  Nos.  33  and  33A,  1921,  Page  205). 

Rejection  of  a  quantity  of  Japanese  Kotenashi  Beans  sold  for 
shipment  "not  later  than  December-January-February  from  the 
Orient"  on  the  ground  that  shipment  was  not  made  from  Yokohama 
until  March  3rd,  the  date  the  vessel  cleared  for  Seattle,  was  not  sus- 
tained on  this  ground,  Seller  having  shown  that  the  goods  were 
shipped  February  23rd  from  Otaru,  Japan,  and  transhipped  at  Yoko- 
hama into  direct  steamer  for  Seattle.  (California  Bean  Dealers  Asso- 
ciation Arbitration  No.  15,  1919,  Page  191). 

Rejection  of  a  quantity  of  Japanese  Kotenashi  Beans  on  the 
ground  that  tender  of  delivery  order  was  unduly  delayed  after  arrival 
of  goods  was  sustained,  Seller  having  neglected  to  make  tender  until 
seventeen  (17)  business  days  after  arrival,  vessel  having  arrived  March 
26th  and  tender  being  made  April  15th,  and  there  was  no  unavoidable 
contingency  contributing  to  the  delay.  (California  Bean  Dealers 
Association  Arbitration  No.  15,  1919,  Page  191). 

Rejection  of  a  quantity  of  Dried  Fruit  sold  under  Uniform  Water 
Shipment  Dried  Fruit  Contract  (1912)  calling  for  August-September 
shipment  on  the  ground  that  Buyer,  having  consented  to  an  extension 
of  time  of  shipment  to  October  9th  and  claiming  he  was  not  obligated 
to  take  delivery  when  vessel  scheduled  for  October  9th  was  withdrawn, 
was  not  sustained  and  Seller  was  justified  in  shipping  October  12th  on 
the  "first  available  steamer."  (Dried  Fruit  Association  of  California 
Arbitration  No.  109,  1912,  Page  188). 

Rejection  of  a  quantity  of  Dried  Fruit  sold  under  contract  calling 
for  August-September  shipment  from  Pacific  Coast  on  the  ground 
that  it  was  not  shipped  until  October  1st  was  sustained,  and  Seller's 
claim  that  he  was  prevented  from  making  shipment  within  contract 
time  by  reason  of  a  shortage  in  cars  was  rejected,  since  he  had  failed 
to  notify  Buyer  of  the  alleged  shortage  in  rail  equipment  prior  to  the 
last  shipping  date  under  the  contract.  (Dried  Fruit  Association  of 
California  Arbitration  No.  2,  1919,  Page  191). 


REPORTS  155 

Rejection  of  a  quantity  of  Dried  Fruit  sold  for  October  shipment 
on  the  grounds,  first,  that  Seller  shipped  a  portion  of  the  goods  under 
other  than  Buyer's  labels  as  specified,  and,  second,  that  October  bill 
of  lading  was  not  obtainable,  was  not  sustained  upon  a  showing  that 
Buyer  did  not  supply  his  boxing  specifications  until  October  4th,  19th 
and  22nd,  respectively,  and  consequently  labels  could  not  be  obtained 
in  time  to  permit  labeling  of  all  the  boxes,  and,  also,  that  the  failure 
to  obtain  October  bill  of  lading  was  due  to  Buyer's  rejection  of  the 
shipment,  arbitrators  citing  the  rule  of  law  that  a  party  who  stipulates 
that  another  shall  do  a  certain  thing,  thereby  impliedly  promises  that 
he  will  himself  do  nothing  which  will  hinder  or  obstruct  that  other  in 
doing  that  thing.  (Dried  Fruit  Association  of  California  Arbitration 
No.  14,  1920,  Page  187). 

Rejection  of  Rice  sold  under  a  C.  I.  F.  contract  specifying  shipment 
" Hongkong  to  Havana,"  on  the  ground  that  the  Rice  was  not  shipped 
direct  but  was  transshipped  at  San  Francisco  to  Havana,  was  not 
sustained,  the  contract  being  silent  as  to  whether  shipment  was  direct 
or  indirect,  as  under  the  C.  I.  F.  term,  Seller  had  the  option  of  trans- 
shipment. (Rice  Association  of  California  Arbitration  No.  28,  1920, 
Page  182). 

Rejection  of  Rice  sold  under  a  contract  C.  I.  F.  San  Francisco 
from  Hongkong,  on  the  ground  that  671  bags  ex  250  tons  arrived 
damaged,  was  not  sustained.  The  contract  contained  a  printed  clause 
that  goods  arriving  damaged  being  for  Seller's  account,  but  will  constitute 
a  portion  of  the  delivery.  The  stipulation  "C.  I.  F."  was  typewritten  and 
therefore  abrogated  the  printed  clause.  (Rice  Association  of  California 
Arbitration  No.  14,  1920,  Affirmed  on  Appeal  to  the  San  Francisco 
Chamber  of  Commerce,  Page  58). 

Rejection  of  a  quantity  of  Manchurian  Bleached  Walnuts  on  the 
ground  that  they  did  not  comply  with  specification  calling  for  No.  1 
Bleached,  90  per  cent  Good  Crack,  was  held  to  be  a  valid  rejection, 
and  Seller  was  relieved  of  making  a  new  tender  under  Rule  15  of  the 
Foreign  Commerce  Association,  he  having  declared  a  specific  lot  and 
there  having  been  no  showing  of  fraud,  misrepresentation  or  bad  faith 
on  the  part  of  Seller.  (Foreign  Commerce  Association  Arbitration  No. 
35,  1921,  and  No.  35-A,  1921.   See  also  Dissenting  Opinion,  Page  156). 

Rejection  by  Buyer  of  Manchurian  Walnuts,  accepted  by  Seller, 
was  sustained,  and  Buyer's  demand  for  a  new  tender  was  not  allowed 
under  Rule  15  of  the  Foreign  Commerce  Association,  he  having  failed 
to  take  delivery  and  demand  an  allowance,  sufficient  to  make  him  whole, 


156  COMMERCIAL  ARBITRATION 

as  provided  by  Rule  13.    (Foreign  Commerce  Association  Arbitration 
No.  43,   1922,  Page  162). 

Rejection  by  Buyer  of  a  second  tender  of  Manchurian  Walnuts 
on  the  ground  that  the  tender  was  unreasonably  delayed,  the  delay 
having  been  eleven  days,  during  which  time  the  Seller  remained  silent 
as  to  his  intentions,  was  sustained,  arbitrators  holding  that  the  option 
of  a  retender  is  favorable  to  Seller  and  he  must  therefore  take  the 
ordinary  commercial  steps  to  preserve  his  rights.  (Foreign  Commerce 
Association  Arbitration  No.  44,  1922,  Page  243). 

Rejection  of  Peanut  Oil  on  the  ground  that  Seller  had  failed  to 
make  tender  to  a  designated  agent  prior  to  shipment  was  sustained. 
(Foreign  Commerce  Association  Arbitration  No.  23,  1920,  Page  250). 

Rejection  of  Kotenashi  Beans  purchased  "spot"  on  the  ground 
that  there  had  been  an  unreasonable  delay  in  tendering  documents,  was 
not  sustained,  it  being  held  that  where  the  contract  was  silent  as  to 
time  of  delivery  Buyer  could  not  cancel  without  demanding  delivery, 
nor  could  Seller  cancel  until  he  has  made  proper  tender  and  same  has 
been  refused.  (San  Francisco  Chamber  of  Commerce  Arbitration,  19 1£), 
Page  252). 

Rejection  of  a  shipment  of  Red  Mexican  Beans  sold  under  the 
terms  of  the  so-called  Water  Contract  (1919)  of  the  California  Bean 
Dealers  Association  on  the  ground  that  the  certificate  covering  the 
shipment  was  made  on  samples  taken  from  the  car  at  interior  loading 
point  and  not  on  the  dock  at  San  Francisco  was  sustained,  it  being 
held  that  the  contract  provided  for  goods  F.  0.  B.  dock  for  steamer, 
and  that  the  point  of  inspection  was  on  the  dock  at  San  Francisco  and 
not  on  the  car  in  the  interior.  (California  Bean  Dealers  Association 
Arbitration  No.  26,  1922,  Page  45). 

Rejection  of  Rice  sold  for  February-March- April  shipment  on 
the  ground  that  the  vessel  did  not  arrive  at  Hong  Kong,  the  port  of 
origin,  until  May  4th  and  did  not  leave  until  May  7th,  was  not  sus- 
tained, Seller  having  shown  that  he  had  engaged  his  freight  space 
January  9th,  that  the  vessel  was  scheduled  to  leave  in  April  and  that 
the  rice  was  delivered  to  the  carrier  and  a  bill  of  lading  issued  April 
20th,  arbitrators  stating  that  the  date  of  bill  of  lading  is  accepted  by  the 
trade  as  date  of  shipment,  unless  fraud  is  shown.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1920,  Page  74). 

"Rejection  Constitutes  Delivery* '  Clause — When  Rule  Is 
Operative — Absence  of  Fraud  on  Seller's  Part — Buyer  Could  Be 


REPORTS  157 

Made  Whole  by  Allowance — A  sold  B  a  quantity  of  Manchurian 
Walnuts,  1920  crop,  bleached,  1J^  or  better  in  size  and  to  crack 
90  per  cent  sound,  April  shipment  from  the  Orient.  The  price  was  on  a 
C.  I.  F.  basis.  The  contract  was  executed  as  to  part  of  the  goods.  On 
June  1st  there  remained  800  100-pound  bags  to  be  delivered,  the  Buyer 
having  extended  the  time  of  shipment  for  this  remainder.  The  goods 
arrived  at  San  Francisco  per  S.  S.  "Taiyo  Maru",  Seller  having  declared 
this  lot  to  Buyer  May  27,  1921.  On  or  about  June  28th  Buyer  was 
given  a  sampling  order  for  300  bags,  and  on  the  29th  he  refused  to 
accept  the  goods  as  being  an  improper  tender  under  the  contract 
because  the  "quality,  size  and  description"  did  not  meet  contract 
requirements,  at  the  same  time  insisting  upon  delivery  of  the  goods  sold 
and  purchased.  On  July  1st  Seller  tendered  800  bags  ex  the  S.  S.  "Taiyo 
Maru",  which  Buyer  refused  to  consider  as  being  a  tender.  On  July 
20th  Seller  advised  Buyer  of  his  acceptance  of  the  rejection,  claiming 
cancellation  of  the  contract  by  virtue  of  Rule  15  of  the  Foreign  Com- 
merce Association.    The  submission  to  arbitration  resulted. 

The  record  shows  that  Seller  bought  by  cable  No.  1  Manchurian 
Bleached  Walnuts,  90  per  cent  sound  crack,  from  his  supplier  in  the 
Orient;  that  his  supplier  made  shipment,  and  obtained  a  Surveyor's 
Certificate  as  to  quality,  the  certificate  showing  good  crack  at  time  of 
shipment  to  be  91  per  cent  but  omitting  the  term  "bleached";  that 
Seller  declared  the  name  of  the  vessel  to  the  Buyer;  that  he  made  a 
tender  of  the  goods  and  that  Buyer  contended  that  the  tender  was 
not  a  good  tender. 

The  Arbitrators  said: 

"This  is  essentially  a  C.  I.  F.  contract,  for  shipment  from  the  Orient, 
except  Seller  assumes  the  risk  of  quality  and  weights  until  delivery  to 
Buyer  at  San  Francisco.  Nevertheless,  the  trade  custom  is  very  clear 
in  that  when  a  Seller  in  good  faith  imports  from  overseas  goods  which 
at  time  of  shipment  were  of  contract  quality,  and  Buyer  exercises  his 
option  of  rejecting,  then  Seller  is  relieved  from  having  to  replace  with 
other  goods. 

"Under  the  rules  Buyer  had  two  options — first,  to  reject  the  goods 
outright  without  recourse  on  the  Seller  (Rule  15),  or  second,  to  accept 
the  goods  with  an  allowance  (Rule  13).  Buyer's  failure  to  accept  the 
tender  was  tantamount  to  a  rejection,  and  the  rule  rejection  if  accepted 
by  Seller  shall  constitute  delivery  automatically  operates. 

"Arbitrators  have  called  in  experts  in  the  walnut  trade  and  examined 
a  number  of  type  samples  of  bleached  Manchurian  Walnuts.  These 
type  samples  showed  variation  in  color  and  appearance  of  different 


158  COMMERCIAL   ARBITRATION 

deliveries  of  bleached  nuts.  The  nuts  tendered  ex  "Taiyo  Maru"  had 
apparently  not  been  properly  bleached,  but  the  majority  arbitrators 
are  of  the  opinion  that  they  were  bought  and  tendered  by  Seller  in 
good  faith.  These  nuts  even  though  poorly  bleached,  or  simply  washed, 
were  not  so  substantially  different  from  contract  quality,  that  had 
Buyer  wanted  to  take  delivery  under  the  contract,  he  could  have  had 
them  re-bleached  and  hand-picked  at  a  reasonable  cost,  such  expenses, 
together  with  allowance  for  being  below  90  per  cent  good  crack 
certainly  being  for  Seller's  account.  The  Buyer,  however,  failed  to 
take  delivery  and  thereby  in  effect  rejecting  the  nuts,  made  Rule  15 
operative. 

"The  arbitrators  believe  that  Rule  15  must  be  sustained,  unless 
there  is  evidence — 

"(A)  That  the  goods  tendered  are  so  different  from  contract  quality 
that  Buyer  cannot  reasonably  be  made  whole  by  an  allowance,  or 

"(B)  Of  fraud,  misrepresentation  or  bad  faith  on  the  part  of  the 
Seller. 

"The  majority  arbitrators  are  of  the  opinion  that  the  record  clearly 
shows  that  Seller  acted  in  entire  good  faith  in  making  shipment  from 
overseas  and  that  his  tender  was  likewise  in  good  faith.  The  majority 
arbitrators  also  are  of  the  opinion  that  there  was  a  rejection  and  that, 
under  Rule  15  of  the  Foreign  Commerce  Association  such  rejection, 
when  accepted  by  Seller,  constitutes  a  termination  of  the  contract. 

Held,  That  Seller  did  tender  800  bags  of  walnuts,  that  the  same 
were  rejected  and  upon  acceptance  of  rejection,  Seller  is  not  obligated 
to  make  a  new  tender  but  the. contract  is  terminated.  (Foreign  Com- 
merce Association  Arbitration  No.  35,  1921.) 

Dissenting  Arbitrator's  Opinion — One  of  the  arbitrators  dis- 
sented, submitting  his  reasons  therefor,  as  follows: 

"It  is  necessary  for  the  Seller  to  tender  the  merchandise  sold,  and 
not  some  other  merchandise  of  a  different  kind,  condition  and  quality. 

"Arbitrators  were  unanimous  in  their  findings  that  the  Seller  assumed 
the  risk  of  quality  and  weight  on  delivery. 

"The  contract  calls  for  No.  1  Manchurian  Walnuts,  bleached  l}/g 
or  better  in  size,  to  crack  90  per  cent  sound,  1920  crop.  Certificates  of 
inspection  issued  in  Shanghai  set  forth  that  the  walnuts  were  91  per  cent 
good  crack  at  time  of  shipment,  whereas  Certificate  of  the  San  Francisco 
Chamber  of  Commerce  covering  a  sample  of  the  walnuts  submitted 
by  Seller  show  them  to  be,  approximately,  77  per  cent  good  crack  upon 
arrival. 


REPORTS  159 

"Upon  inquiry  by  the  arbitrators  as  to  this  difference  two  reputable 
experts  stated  positively  that  the  walnuts  were  of  approximately 
the  same  quality  when  they  arrived  in  San  Francisco  as  when  they  left 
Shanghai.  The  difference  in  quality  as  set  forth  in  the  Certificates 
issued  in  Shanghai  and  the  quality  as  determined  by  the  Inspector  of 
the  San  Francisco  Chamber  of  Commerce  can  only  be  accounted  for  by 
gross  negligence,  or  fraud,  in  the  description  of  the  nuts  as  shown 
in  Shanghai  Certificates.  The  correctness  of  the  San  Francisco  Chamber 
of  Commerce  Certificate  has  not  been  questioned  as  regards  quality. 
Neither  the  Shanghai  Certificates  or  the  Certificate  of  San  Francisco 
Chamber  of  Commerce  describe  the  walnuts  as  'bleached',  and 
samples  placed  before  the  arbitrators  were  in  my  opinion  not  "bleached". 
It  was  suggested  that  the  nuts  may  have  been  put  through  a  weak 
solution;  however,  the  other  arbitrators  did  not  consider  them  properly 
'bleached'  if  indeed  they  were  bleached  at  all.  The  opinion  of  the 
experts  was  that  they  were  not  bleached  and  the  Seller,  himself,  ad- 
mitted to  a  representative  of  the  Foreign  Commerce  Association  that 
only  a  portion  of  them  were  'bleached'. 

"To  hold  the  Seller  has  discharged  his  obligation  by  tendering 
'unbleached'  nuts  of  about  77  per  cent  good  crack  when  the  contract 
calls  for  'bleached'  nuts  90  per  cent  good  crack,  or  that  the  Buyer  is 
obligated  to  accept  such  a  tender  and  claim  upon  Seller  for  an  allowance, 
is  inconsistent.  The  Seller  is  obligated  to  supply  'bleached'  nuts  of 
the  crack  called  for. 

"Buyer  cannot  be  penalized  for  any  gross  negligence,  or  fraud  on 
the  part  of  Seller  or  his  supplier.  Seller  is  unquestionably  responsible 
to  Buyer  for  his  own  and  his  supplier's  acts,  or  failure  to  act,  insofar 
as  same  affects  the  contract.  Responsibility  for  negligence  or  fraud 
cannot  be  saddled  on  the  Buyer  under  the  provision  in  the  contract 
that  rejection  shall  constitute  delivery.  The  Seller  must  supply  what 
he  has  sold,  exercising  such  care  as  to  see  that  Buyer  receives  what  he 
has  purchased  and  protect  him  from  gross  negligence,  or  fraud,  on  the 
part  of  Seller  or  his  supplier,  who  is  unknown  to  Buyer. 

"If  the  award  of  the  arbitrators  is  sound  in  its  reasoning  the  Seller 
could  tender  'unbleached'  walnuts  15  per  cent  good  crack  and  the 
Buyer,  upon  refusing  to  accept  same  as  a  tender  under  the  contract, 
would  be  held  to  have  rejected  the  nuts,  and  the  Seller,  because  of  such 
rejection,  would  be  relieved  of  supplying  what  he  had  sold. 

"All  the  arbitrators  were  agreed  that  the  Seller  assumed  the  risk  of 
quality  and  weights  on  delivery.  No  custom  that  may  prevail  can 
override  the  express  conditions  of  the  contract  in  this  respect.     The 


160  COMMERCIAL   ARBITRATION 

Shanghai  Certificates,  whether  fraudulent  or  otherwise,  have  no 
relevancy  in  determining  quality,  if  the  Seller  assumes  the  risk  of 
quality  and  weights  on  delivery,  as  the  arbitrators  found  in  their 
award  and  in  which  I  concur.  It  was,  therefore,  incumbent  upon  the 
Seller  to  know  what  the  quality  was  on  delivery,  and  position  himself 
to  deliver  nuts  of  the  kind  and  quality  sold.  In  default  thereof,  he 
cannot  escape  his  obligation  by  tendering  nuts  different  in  kind  and 
quality  to  those  sold. 

"Assuming,  for  the  sake  of  argument,  that  this  was  a  C.  I.  F.  sale 
and  with  no  responsibility  on  the  part  of  Seller  to  deliver  quality  and 
weight  at  destination  but  only  to  deliver  walnuts  to  the  exporting 
vessel  of  the  kind  and  quality  sold,  obtaining  the  usual  documents  in 
support  thereof,  the  Certificate  of  Inspection  issued  in. Shanghai  would 
very  strongly,  if  not  clearly  evidence,  in  the  light  of  the  San  Francisco 
Certificate  and  testimony  of  the  experts,  to  the  effect  that  the  nuts 
could  not  materially  deteriorate  in  transit,  that  a  fraud  had  been  per- 
petrated upon  the  Seller  and  that  the  quality  of  nuts  described  in  the 
Shanghai  Certificate  had  never  been  shipped. 

"Do  the  arbitrators,  in  their  award,  contend  that,  if  a  fraud  had  been 
perpetrated  on  the  supplier  in  Shanghai  and  same  had  been  ascertained 
by  the  Buyer  before  merchandise  had  been  tendered  to  him,  the 
rejection  of  such  an  alleged  tender  would  relieve  him  from  his 
obligation  to  supply  the  nuts  he  took  the  risk  of  supplying  under  the 
contract? 

"However,  it  is  not  necessary  to  look  upon  this  as  a  C.  I.  F.  trans- 
action. The  makers  of  the  award  have  agreed  with  me  that  the  Seller 
assumed  the  risk  of  quality  and  weight  on  delivery.  Therefore,  to  require 
Seller  to  discharge  his  contract  obligation  in  this  respect,  it  was  neces- 
sary for  him  to  tender  nuts  of  the  quality  he  sold.  To  hold  otherwise 
is  to  disregard  the  contract  and  go  outside  of  it  entirely. 

"Therefore,  I  hold  that  the  tender  by  Seller,  being  an  improper 
one,  the  Buyer  is  justified  in  insisting  upon  and  is  entitled  to  a  valid 
tender  of  No.  1  Manchurian  Bleached  Walnuts,  V/%  or  better  in  size 
to  crack  90  per  cent  sound,  1920  crop. 

Arbitrators  on  Appeal  Sustain  Award — From  the  majority 
award,  the  Buyer  appealed,  alleging  that  the  rule  had  been  erroneously 
interpreted  by  the  majority  arbitrators  and  asserting  that  the  minority 
opinion  should  prevail.  The  Appeal  Board  sustained  and  affirmed  the 
majority  award,  as  follows: 


REPORTS  161 

"This  matter,  involving  a  tender  of  800  bags  No.  1  Manchurian 
Walnuts,  Bleached,  1920  crop,  \y%  or  better  in  size  and  to  crack 
90  per  cent  sound,  comes  before  the  arbitrators  on  appeal,  the  Buyer 
claiming  that  the  majority  arbitrators  had  erred  in  their  award,  dated 
at  San  Francisco  August  12,  1921.  There  was  a  minority  opinion  filed 
in  the  original  hearing,  the  arbitrator  holding  that  the  majority  was  in 
error. 

"The  facts  of  the  transaction  are  fully  stated  in  the  original  finding 
and  award.  The  parties  hereto  have  submitted  additional  written 
arguments  to  these  arbitrators,  which,  together  with  the  original 
record,  have  all  been  presented  to  and  considered  by  the  arbitrators 
on  appeal. 

"The  prevailing  opinion  held  that,  under  the  rules,  Buyer  had  the 
option  of  (1)  to  reject  the  goods  outright  without  recourse  on  the 
Seller  (Rule  15);  or  (2)  to  accept  the  goods  with  an  allowance  (Rule  13). 

"After  a  most  careful  consideration  of  the  record,  the  arbitrators 
on  appeal  are  of  the  unanimous  opinion  that  the  prevailing  opinion 
in  the  original  arbitration  is  sound;  that  the  rules  governing  the  con- 
tract, particularly  Rules  13  and  15,  reach  a  fundamental  principle 
involved  in  the  importing  business,  namely,  that  goods  brought 
overseas  in  good  faith,  by  an  importer  who  fortifies  himself  by  a 
declaration  of  the  lot,  shall  be  accepted  by  a  buyer,  if  merchantable, 
and  if  off-grade  shall  be  subject  to  an  allowance.  Rule  13  affords  a 
buyer  ample  protection  in  that  it  requires  a  Seller  to  give  bond  or  a 
bank  guarantee  for  the  repayment  of  any  allowance  that  may  be  made 
by  arbitration.  Failing  to  take  advantage  of  Rule  13,  a  buyer,  as  in 
this  case,  cannot  demand  another  tender  if  a  Seller  relies  upon  Rule  15. 
In  the  opinion  of  the  arbitrators  on  appeal,  the  Seller  did  make  a  tender 
of  the  specific  lot  declared  to  Buyer,  that  Buyer  did  reject  the  tender 
and  that  Seller  did  accept  the  rejection,  Buyer  thereby  being  estopped 
from  maintaining  any  claim  whatsoever  against  the  Seller.  To  put 
the  matter  in  another  light,  Buyer  had  an  election  of  remedies.  Having 
exercised  one  and  disregarded  another,  he  cannot  thereafter  plead  his 
own  act  against  Seller. 

"The  record  indicates  that  Seller  acted  in  good  faith,  and  there  is 
not  the  slightest  evidence  of  fraud  or  misrepresentation  on  his  part. 

"The  minority  arbitrator  in  the  original  matter  has  argued  with 
much  potency  that  the  view  taken  by  the  majority  was  to  disregard 
the  contract  and  go  outside  of  it  entirely.  But  the  arbitrators  on  appeal 
are  of  the  unanimous  opinion  that  the  rules  covering  a  contract  are  as 


162  COMMERCIAL  ARBITRATION 

much  a  part  of  it  and  within  its  four  corners  as  any  written  provision 
thereof  so  long  as  the  written  provisions  do  not  abrogate  those  printed. 

"Therefore,  the  arbitrators  on  appeal  unanimously  make  the  following 
findings  and  award: 

"That  the  majority  award  in  the  original  matter  between  Seller 
and  Buyer,  is  affirmed  and  approved  and  the  same  is  hereby  adopted 
as  the  finding  and  award  on  appeal,  to-wit:  That  Seller  did  tender 
800  bags  of  walnuts  to  Buyer  and  that  the  same  were  rejected,  and  that 
upon  such  rejection  and  acceptance  thereof  Seller  is  not  obligated 
to  make  a  new  tender  but  the  contract  is  terminated."  (Foreign 
Commerce  Association  Arbitration  No.  35 -A,  1921.) 

Allowance,  Refused  by  Buyer,  Set  Aside — New  Tender  Not 
Required   Under   Rejection   Clause — First   Award    Rescinded — 

A  Pacific  Coast  importer  sold  a  quantity  of  Peanuts  to  a  Chicago 
merchant.  Upon  consideration  by  arbitrators  it  was  decided  that  the 
peanuts  were  not  a  good  delivery  for  size  but  were  merchantable,  and 
the  arbitrators  made  an  allowance  of  V/^  cents  a  pound  for  the  difference 
in  size  and  quality.  Subsequent  to  the  publication  of  the  award,  the 
Buyer  claimed  that  he  rejected  this  lot  of  peanuts  and  desired  a  new 
tender.   Seller  accepted  the  rejection. 

Held,  That  Buyer  having  rejected  the  Peanuts,  which  rejection, 
under  the  terms  of  the  contract,  constitutes  delivery  and  no  other 
tender  is  required  of  Seller.  In  accordance  herewith,  the  original 
award  is  rescinded.  (San  Francisco  Chamber  of  Commerce  Arbitration, 
1920). 

Rejection  Constitutes  Delivery — Buyer  Not  Entitled  to  New 
Tender — A  Pacific  Coast  importer  sold  to  a  San  Francisco  merchant 
a  quantity  of  Manchurian  Walnuts,  and  the  Buyer  rejected  500 
bags  of  one  delivery  on  the  ground  that  the  nuts  were  under  size  specified 
in  the  contract,  and  demanded  a  new  tender.  The  contract  was  the 
Uniform  Contract  of  the  Foreign  Commerce  Association  and  its  rules 
governed.  The  Seller  accepted  the  rejection,  contesting  the  right  of 
the  Buyer  to  demand  a  new  tender. 

Held,  That  under  Rule  15  of  the  Foreign  Commerce  Association, 
rejection,  if  accepted  by  Seller,  constitutes  delivery.  The  walnuts, 
being  merchantable,  the  Buyer  had  the  option,  under  Rule  13,  of 
taking  delivery  and  claiming  for  an  allowance  sufficient  to  make  him 
whole.  Having  rejected  the  goods  he  is  not  entitled  to  a  second  tender. 
(Foreign  Commerce  Association  Arbitration  No.  43,  1922). 


REPORTS  163 


Reversal  for  Concealment  of  Facts 

Editor's  Note  .  —  While  the  rules  of  arbitration  of  various 
commercial  organizations  contemplate  only  one  submission  and  the 
Findings  and  Award  of  arbitrators  are  considered  final  thereunder, 
occasionally  it  is  found  necessary  by  arbitrators  peremptorily  to  reopen 
a  case  once  decided  on  the  request  of  one  of  the  parties,  particularly 
if  there  is  evidence  of  a  concealment  of  facts  by  the  adverse  party 
on  the  first  hearing.  While  this  is  provided  for  in  arbitration  rules  of 
various  associations,  it  will  be  noted  that  such  procedure  is  not  valid  in 
law  unless  it  has  been  established  by  by-law  or  rules  of  the  organization 
before  which  the  parties  appear  or  to  which  they  submit.  Under  a 
statutory  form  of  arbitration  or  a  common  law  arbitration,  arbitrators 
lose  their  jurisdiction  once  they  have  made  their  findings  and  award, 
and  a  case  once  decided  may  be  reopened  only  by  agreement  of  the 
parties  thereto.  An  example  of  a  complete  reversal  by  arbitrators, 
acting  under  the  by-laws  and  rules  of  an  association,  is  appended 
for  the  information  of  persons  who  may  be  the  victims  of  such  conceal- 
ment, tantamount  to  fraud,  on  the  part  of  a  party  to  a  dispute. 

Arbitrators  Acting  Under  Association  Rules  Penalize  Party 
for  Sharp  Practices — A,  a  California  Seller,  sold  to  B,  a  Texas  Buyer, 
a  small  quantity  of  Blackeye  Beans.  On  arrival  of  the  goods  B 
rejected,  alleging  that  the  beans  were  infected  with  weevil.  Upon  the 
matter  being  submitted  to  arbitration,  B  caused  an  official  sample  to 
be  sent  to  the  California  Bean  Dealers  Association  of  California,  and 
rested  his  case  solely  on  the  question  of  quality  to  be  determined  by 
the  arbitrators  from  an  examination  of  such  sample.  A  raised  the  point 
that  claim  as  to  quality  was  not  made  within  three  (3)  full  business 
days  after  arrival  of  shipment,  as  provided  by  the  Uniform  Contract, 
and  therefore  B  was  not  entitled  to  the  decision.  He  set  forth  that  the 
car  arrived  November  15th  and  inferred  that  the  alleged  weevily 
beans  were  not  reported  until  December  13th.  For  the  reason  that  B 
did  not  use  due  diligence  in  reporting  the  condition  of  the  beans  to 
Seller,  according  to  the  evidence  submitted,  the  arbitrators  held  that 
he  must  take  delivery  thereof.  Subsequently  it  developed  that  B  had 
acted  promptly  in  the  matter,  and  on  November  16th,  the  day  after 
the  arrival  of  the  car,  had  sent  a  telegram  to  A  informing  him  of  the 
condition  of  the  beans  and  asking  disposition.  In  a  formal  protest  to 
the  arbitrators,  B  stated  that  he  had  not  included  a  copy  of  the  telegram 
in  his  submission  for  the  reason  that  the  question  of  such  delay  on  his 


164  COMMERCIAL   ARBITRATION 

part  was  not  anticipated  by  him  in  view  of  the  telegram  itself.    In  a 
communication  addressed  to  A,  the  Seller,  the  arbitrators  said : 

"Knowing  as  you  must  have,  from  the  receipt  of  the  tele- 
gram in  question,  that  the  finding  was  unjust  and  should 
have  been  solely  on  the  quality  of  the  beans,  you  should  have 
at  once  called  the  arbitrators'  attention  to  the  fact.  We  are 
sending  B  a  copy  of  this  letter,  and  are  hereby  notifying 
you  both  that  the  arbitrators  reopened  the  findings  in  this 
case,  and  will  reconsider  it  in  the  light  of  the  present  evidence, 
filing  supplemental  findings  in  connection  therewith." 

Subsequently,  a  rehearing  of  the  case  was  had,  the  arbitrators 
stating  in  supplemental  findings  and  award : 

"This  case  has  been  reopened  by  the  arbitrators  owing  to 
the  fact  that  the  original  decision  was  predicated  upon  the 
only  information  the  arbitrators  had  at  that  time,  viz. :  That 
the  Buyer  had  been  guilty  of  negligence  in  not  promptly  noti- 
fying the  Seller  of  the  condition  of  the  shipment  on  arrival.  It 
having  been  shown  conclusively  to  the  arbitrators  that  proper 
notification  was  sent  on  the  day  following  the  arrival  of  the 
shipment,  and  that  therefore  the  matter  should  be  consid- 
ered on  the  question  of  quality  only,  the  arbitrators  having 
made  a  full  and  careful  examination  of  the  samples  submitted, 
are  unanimous  in  the  opinion  that  the  weevily  condition  of 
the  beans  warrants  an  outright  rejection  by  Buyer."  (Cali- 
fornia Bean  Dealers  Association  Arbitration  No.  10,  1919). 


REPORTS  165 


Sales  on  SampL 


The  general  rule  on  sales  subject  to  sample  is  that  quality  of  goods 
must  be  equal  to  or  better  than  sample  submitted.  (Foreign  Commerce 
Association  Rule  No.  29;  California  Bean  Dealers  Association,  Uniform 
California  Bean  Contract;  Dried  Fruit  Association  of  California, 
Canner's  League  of  California  Contract  Provisions). 

When  merchandise  is  sold  on  regular  grades  and  types  established 
by  these  Rules,  or  when  sold  with  a  specific  guarantee,  or  when  sold 
on  sample,  Buyer  may  reject  if  the  merchandise  does  not  conform  to 
contract  requirements.  When  spot  lots  are  sold  on  sample,  permitting 
of  the  immediate  verification  of  the  actual  merchandise  by  the  Buyer, 
and  selling  sample  is  not  expressly  guaranteed  to  represent  the  mer- 
chandise, there  shall  be  no  sale  if  goods  do  not  conform  to  sale  require- 
ments. In  all  other  cases,  delivery  shall  be  taken  by  purchaser  if  mer- 
chandise be  good  merchantable,  at  a  proper  allowance  to  be  fixed  by 
arbitration.     (Foreign  Commerce  Association  Rule  No.  268). 

Where  contract  provided  that  sample  of  Rice  was  subject  to  Buyer's 
approval,  his  disapproval  of  the-  sample  submitted  by  Seller  released 
Seller  of  obligation  to  make  any  other  tender.  (Rice  Association  of 
California  Arbitration  No.  5-B,  1921,  Page  167). 

Where  contract  provides  for  shipment  November  24th  to  26th  and 
that  Seller  shall  submit  sample  of  Rice  for  Buyer's  approval  on  or 
before  November  23rd,  Seller  submitted  sample  on  November  26th, 
making  it  impossible  to  effect  shipment  on  that  date.  Seller  was  declared 
in  default,  and  the  penalty  assessed  was  the  difference  between  the 
sales  price  and  the  market  price  on  the  date  of  default.  (Rice  Association 
of  California  Arbitration  No.  5,  1921,  Page  167).     . 

When  there  has  been  carelessness  on  the  part  of  both  Buyer  and 
Seller  in  the  identification  of  sales  sample,  identical  sample  numbers 
having  been  given  to  two  lots  of  Rice,  damages  resulting  to  Buyer  were 
minimized  by  arbitrators.  (San  Francisco  Chamber  of  Commerce 
Arbitration,  1919,  Page  166). 

When  Seller  submits  a  sample  of  Mustard  Seed  and  thereafter 
sends  Buyer  a  contract  in  which  Buyer  interpelates  the  words  and 
to  be  the  same  as  sample  after  the  description  of  the  mustard  seed, 
and  Seller  fails  to  object  to  the  reference  to  sample,  the  delivery  must 
conform  to  sample,  which  controls  the  grade.  But  outright  rejection 
will  not  be  permitted  when  contract  stipulates  that  all  goods  shall  be 


166  COMMERCIAL   ARBITRATION 

taken  at  an  allowance.   (San  Francisco  Chamber  of  Commerce  Arbitra- 
tion, 1918,  Page  168). 

When  Dried  Fruit  is  sold  on  sample  and  Buyer  rejects  the  goods, 
arbitrators  will  consider  only  the  sample  upon  which  the  sale  was  con- 
firmed and  the  rejection  based.  (Dried  Fruit  Association  of  California 
Arbitration  No.  175,  1914,  Page  170). 

When  a  contract  covering  Beans  specifies  season's  average  and  the 
Seller  advised  Buyer  in  his  message  of  confirmation  that  the  beans 
were  like  sample  expressed,  Buyer  is  entitled  to  delivery  of  a  car  of 
season's  average  beans,  the  description  and  not  the  sample  controlling 
the  contract.  (California  Bean  Dealers  Association  Arbitration  No.  23, 
1919,  Page  171). 

Careless  Identification  of  Rice  Samples —  Duplication  of 
Numbers  for  Different  Grades — Damages  for  Buyer  Reduced 
for  Laches — A  sold  to  B  1,600  bags  Coated  California  Japan  Rice 
at  $5.70  per  100  lbs.  net,  delivery  to  be  F.  O.  B.  Sacramento  or  San 
Francisco. 

The  sale  was  made  under  two  contracts — one  for  1,000  pockets  and 
one  for  600  pockets  of  100  lbs.  each,  and  in  each  case  the  grade  was 
specified  as  "Lot  No.  160."  The  terms  specified  Chamber  of  Commerce 
inspection  certificate  to  be  issued  to  Buyer  specifying  equal  to  type  No. 
160  now  held  by  them,  in  the  1,000  pocket  contract,  and  same  terms  in 
the  600  pocket  contract  except  "Buyer"  was  substituted  for  the  last 
word  "them." 

Buyer  claimed  that  the  rice  tendered  was  not  equal  in  quality  to  a 
certain  type  No.  160  which  he  had  purchased  under  two  previous 
contracts  and  of  which  he  held  sample  and  that  he  expected  delivery 
to  be  made  against  that  sample.  Buyer  refused  to  accept  the  delivery 
tendered  and  claimed  damages  in  the  sum  of  $4,704.  Seller  claims 
that  he  had  not  contracted  to  furnish  rice  as  per  type  No.  160  sold 
Buyer  previously,  as  that  particular  lot  of  rice  had  been  exhausted 
and  he  had  so  informed  the  Buyer  on  April  9th,  when  asked  by  him 
for  a  quotation  on  an  additional  quantity  of  this  type. 

Seller  claims  that  Lot  No.  160  in  the  contract  referred  to  another 
certain  lot  of  rice  which  happened  to  have  the  same  number  and  that 
he  had  sent  Buyer  a  sample  of  this  lot  with  the  quotation  upon  which 
sale  was  based,  and  that  this  rice  is  not  equal  in  quality  to  the  type 
No.  160  previously  sold  and  was  sold  at  a  lower  price  than  that  type 
could  be  furnished.  Seller  stated  Buyer  claimed  he  did  not  receive 
this  sample,  which  Seller  cannot  understand,  as  the  sample  was  wrapped 
with  the  quotations. 


REPORTS  167 

Seller  claimed  that  Buyer  purchased  this  rice  on  sample  and  that  he 
purchased  rice  equal  in  quality  to  sample  submitted  with  quotations 
on  May  14th  and  that  the  No.  160  designated  this  type  only. 

Held,  That  while  both  parties  acted  in  good  faith  in  this  transaction, 
both  made  mistakes  in  the  methods  of  handling  and  identification  of 
samples.  Buyer  should,  in  accordance  with  usual  custom,  have  de- 
manded a  sample,  even  though  it  were  a  duplicate  one,  of  the  rice 
quoted  him  as  sample  No.  160,  in  order  to  make  sure  that  the  rice 
he  thought  he  was  buying  was  equal  in  quality  to  the  previous  sample 
No.  160,  which  he  had  previously  bought.  Seller,  on  the  other  hand, 
knowing  that  Buyer  held  a  previous  sample  No.  160  of  a  different 
quality  from  that  he  understood  he  was  to  furnish  in  this  sale,  should 
have  specified  in  quotation  and  contract  that  "lot  No.  160"  was  as 
per  sample  submitted  or  was  not  as  per  the  original  sample  No.  160 
used  in  a  previous  sale,  as  he  knew  inspection  certificate  was  to  be 
furnished  that  the  goods  delivered  were  to  be  equal  to  type  No.  160. 

Buyer  had  sold  this  rice  in  Cuba  for  $6.50  per  100  lbs.  and  the  net 
cost  to  him  of  the  rice  at  Sacramento  would  have  been  $5.56  per  100 
lbs.,  which  would  have  left  him  a  profit  of  $1,504,  if  delivery  had  been 
made  by  Seller. 

Buyer  testified  that  he  would  have  to  pay  $2,000  to  his  Cuban 
purchaser  as  damages  for  non-fulfillment  of  his  contract,  thus  making  a 
total  loss  to  him  of  $3,504  on  the  transaction. 

We  decide  this  case  in  favor  of  Buyer  and  award  to  him  the  sum  of 
$2,504  as  damages,  and  that  payment  to  him  by  Seller  of  said  sum 
shall  constitute  full  settlement  of  all  claims  in  this  case.  We  have 
deducted  $1,000  from  the  total  damages  Buyer  shows  he  would  sustain, 
as  he  did  not  handle  the  sampling  of  this  rice  transaction  in  the  cus- 
tomary way.  We  feel  that  he  thought  he  was  to  receive  rice  equal 
in  quality  to  the  original  sample  No.  160  but  the  low  price  quoted, 
according  to  current  market,  should  have  caused  him  to  make  sure 
he  would  receive  the  quality  of  rice  he  expected  to  buy.  We  decide 
that  the  1,600  pockets  of  rice  in  question  are  to  be  retained  by  Seller. 
(San  Francisco  Chamber  of  Commerce  Arbitration,  1919). 

When  Sample  Disapproved  by  Buyer,  Seller  Not  Obliged  to 
Make  Other  Tender — A  California  rice  mill  sold  to  a  San  Francisco 
exporter  500  pockets  No.  1  California  Japan  Brown  Rice,  sample  to 
be  submitted  immediately  and  subject  to  Buyer's  approval  of  sample, 
which  was  to  be  submitted  November  23rd.  The  sales  memorandum 
was  dated  November  23rd  and  the  sample  was  not  submitted  to  Buyer 


168  COMMERCIAL   ARBITRATION 

until  November  26th.  Buyer  rejected  the  sample,  claiming  that  quality 
was  inferior  to  grade  described,  and  Seller  did  not  submit  a  new  sample. 
Buyer  demanded  delivery  of  the  rice  and  Seller  claimed  that  the  sale 
was  subject  to  Buyer's  approval  of  a  specific  sample  and  Buyer 
having  disapproved  the  sample,  the  contract  was  cancelled. 

Held,  That  the  Seller,  in  submitting  a  sample  which  was  dis- 
approved by  Buyer,  fulfilled  his  obligation  under  the  contract  and  he  is 
not  required  to  deliver  any  Rice  after  disapproval  of  sample.  (Rice 
Association  of  California  Arbitration  No.  5-B,   1921). 

Sample  Sent  by  Seller  Is  Part  of  Contract  Terms — Buyer  Not 
Entitled    to    Reject — Allowance    Made    for    Inferior    Grade — A 

California  importer  sold  to  a  Chicago  packer  50  tons  Chinese  Mustard 
Seed,  $9.00  per  100  pounds,  shipment  from  the  Orient  during 
November-December-January,  Seller's  option.  The  original  offer 
was  made  at  9J^c  by  letter  dated  November  1,  1918,  and  enclosed 
therewith  was  a  sample  of  Chinese  Mustard  Seed.  Buyer  on  November 
9,  1918,  after  examining  the  sample  submitted,  wired  an  offer  of  9c 
per  lb.  which  offer  was  accepted  by  Seller  in  telegram  of  November  11th, 
and  on  November  12th  Seller  sent  Buyer  a  written  contract  for  his 
signature.  On  November  22nd,  Buyer  returned  to  Seller  one  copy  of 
the  contract,  but,  understanding  that  the  sale  was  based  upon  the 
sample  submitted  and  to  make  clear  that  his  purchase  was  made  on 
this  sample,  he  inserted  in  the  contract  the  following  clause:  And  to 
be  same  as  sample,  at  the  same  time  notifying  Seller,  in  letter  of 
November  22nd,  that  he  had  entered  this  clause  in  the  contract  and  if 
this  was  not  agreeable  to  Seller  he  would  consider  the  order  cancelled. 
No  reply  was  received  from  Seller  offering  objection  to  that  clause. 
Seller  stated  to  the  arbitrators  that  he  had  not  intended  to  sell  as  per 
sample  and  had  only  sent  it  as  a  type  sample,  but  as  he  had  already 
ordered  the  mustard  seed  in  Japan  and  could  not  cancel  the  order 
there,  he  decided  when  he  received  the  contract  back  and  noted  the 
insertion  of  this  clause  mentioned,  "to  take  a  chance"  that  the  seed 
shipped  would  be  up  to  that  sample. 

When  the  seed  arrived  about  March  7,  1919,  Buyer  on  that  date 
wired  Seller  that  he  rejected  the  shipment  because  it  was  not  equal  to 
sample.   The  questions  to  be  decided  by  the  arbitrators  were: 

"First — Was  the  sale  made  on  the  contract  of  November  11,  1918, 
or  on  the  original  telegrams  and  letters  exchanged? 

"Second — Was  this  sale  made  as  per  sample  or  only  as  a  fair  average 
quality  of  the  season? 


REPORTS  169 

"Third — Is  the  mustard  seed  in  question  up  to  contract  in  quality 
and,  if  not,  is  Buyer  entitled  to  reject  the  shipment  or  is  he  entitled 
only  to  an  allowance  and,  if  the  latter,  what  allowance?" 

Held,  That  this  sale  was  made  on  the  contract  of  November  11, 
1918,  and  that  the  sale  was  not  completed  until  said  contract  was 
signed  and  accepted.  We  decided  that  this  sale  was  made  with  the 
condition  that  the  goods  delivered  were  to  be  same  as  sample  and  that 
the  sample  submitted  by  Buyer  was  the  one  referred  to  in  the  contract, 
no  evidence  having  been  offered  controverting  affidavits  submitted  that 
said  sample  was  the  one  furnished  by  Seller  with  his  original  offer. 
Seller  was  given  by  Buyer  the  right  to  object  to  this  insertion  of  the 
clause  and  to  be  same  as  sample  and  failing  to  do  so  he  was  obligated  to 
furnish  goods  equal  to  the  sample  referred  to.  After  carefully  com- 
paring said  sample  with  the  average  sample  of  the  shipment  in  question, 
we  decide  that  the  mustard  seed  delivered  is  not  the  same  as  sample 
and  is  inferior  in  quality. 

We  decide,  however,  that  Buyer  is  not  entitled,  under  paragraph 
2  on  back  of  the  contract,  to  reject  this  shipment  on  account  of  any 
difference  in  selection  or  quality,  as  he  had  notice  when  he  signed  the 
contract  that  all  the  conditions  stated  on  the  reverse  side  thereof  were 
made  a  part  of  the  contract. 

We  decide  that  Buyer  is  entitled  to  a  fair  allowance  on  account  of 
inferior  quality  of  Mustard  Seed  delivered  as  compared  with  the  sample 
referred  to  in  the  contract,  which  allowance  we  fix  at  two  and  one-half 
(2J^c)  per  pound  for  the  entire  shipment  in  question  and  we  decide 
that  Seller  shall  refund  to  Buyer  that  amount.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1919.) 

When  Quality  Is  Determinable  by  Sample — A  sold  B  a  quantity 
of  No.  1  Recleaned  Red  Kidney  Beans  similar  to  a  sample  marked 
No.  9,  reference  to  the  sample  being  incorporated  in  the  contract. 
B  claimed  that  he  did  not  understand  in  signing  the  contract  that 
delivery  was  to  be  other  than  No.  1  Recleaned  Beans,  and  that  sample 
No.  9  simply  represented  the  type  of  beans  he  might  expect  to  receive. 

Held,  That  A  took  the  precaution  to  forward  this  sample  and  make 
it  a  part  of  the  contract,  and,  therefore,  B  should  have  awaited  receipt 
of  the  sample,  or  failing  to  receive  it,  should  have  demanded  a  new 
sample  before  signing  the  contract.  That  A's  position  that  a  No.  1 
Recleaned  Bean  is  of  a  lower  grade  than  Choice  Recleaned  is  sub- 


170  COMMERCIAL  ARBITRATION 

stantiated  by  a  well  defined  custom  of  the  trade.  That  B  did  not  show 
due  diligence  before  signing  the  contract  in  which  a  clause  was  in- 
corporated reading  "similar  to  sample  No.  9."  (California  Bean  Dealers 
Association  Arbitration  No.  20,  1019). 

Sales  Sample  Governs  Delivery — A  sold  B  a  quantity  of  Dried 
Fruit  on  sample  under  the  following  circumstances:  Buyer's  repre- 
sentative examined  certain  boxes  of  fruit  on  Seller's  premises  and  made 
the  purchase,  withdrawing  from  the  large  sample  a  sufficient  quantity 
to  show  to  his  principal,  who  confirmed  the  sale  and  executed  a  contract. 
The  samples  as  drawn  were  then  used  for  comparison  with  the  goods 
delivered,  and  Buyer  thereupon  rejected.  The  Buyer  requested  that 
the  arbitrators  compare  the  goods  not  only  with  the  sample  submitted 
but  with  the  original  sample  in  Seller's  possession  from  which  this 
sample  was  drawn. 

Held,  That  Buyer  was  not  entitled  to  any  other  sample  than  that 
upon  which  the  sale  was  confirmed  and  the  rejection  based.  (Dried 
Fruit  Association  of  California  Arbitration  No.  175,  1914). 

Misbranding  Goods  Sold  on  Sample — In  examining  the  samples, 
the  arbitrators  discovered  that  the  goods  had  been  misbranded  in  that 
Buyer  labelled  them  for  shipment  "Northern  California  Royal 
Apricots."  In  their  findings  the  arbitrators  condemn  this  misbranding 
in  the  following  language: 

"In  truth  and  in  fact  the  goods  are  not  'Northern'  and  a  part  of 
the  shipment  is  made  up  of  Teach  Apricots'  and  not  'Royal',  all  of 
which  is  fully  known  to  the  Seller,  against  the  principles  of  this  Asso- 
ciation and  a  practice  that  we  deplore  and  wish  to  in  every  way  dis- 
courage." (Dried  Fruit  Association  of  California  Arbitration  No.  175, 
1914). 

Goods  May  Be  of  Better  Grade  Than  Specified — Where  a 
contract  specifies  a  particular  grade  or  where  sale  is  subject  to  sample  a 
well  defined  usage  of  trade  in  various  commodities  recognizes  the 
principle  that  the  delivery  may  be  of  a  better  grade  than  that  specified 
or  guaranteed  by  sample.  It  is  well  recognized  and  generally  accepted 
that  the  purchaser  of  goods  is  in  no  way  injured  by  receiving  something 
better  than  the  Seller  had  contracted  to  deliver.  Stated  conversely, 
while  a  Seller  is  obligated  to  deliver  goods  up  to  the  grade  specified  or 
equal  to  the  sample  submitted,  he  is  not  limited  to  the  identical  grade 
described  or  sample  submitted  provided  a  better  grade  or  superior 
quality  is  delivered. 


REPORTS  171 

Percentage    of    Fat    in    Manila    Hydraulic    Copra    Cake — A 

contracted  to  sell  B  about  twelve  hundred  (1200)  tons  hydraulic 
pressed  Copra  Cake  in  sound  condition,  protein  guaranteed  17J^ 
per  cent,  fat  4  to  6  per  cent,  October-November-December  shipment 
from  Manila,  per  sailer,  f.  o.  b.  cars  San  Francisco,  in  bags  or  matting, 
usual  terms  of  contract.  The  sailing  vessel  "Moshulu"  sailed  from 
Manila  November  12,  1919,  and  Seller  tendered  to  Buyer  bill  of  lading, 
showing  shipment  of  about  five  hundred  (500)  short  tons  hydraulic 
pressed  copra  cake  on  October  21,  1919.  The  vessel  arrived  at  San 
Francisco,  March  2,  1920.  B  contended  that  the  cake  was  damaged 
by  water  but  this  was  not  substantiated,  and  B's  contention  on  this 
point  was  disallowed.  As  to  the  maximum  percentage  of  fat  content 
in  Manila  hydraulic  pressed  copra  cake  the  arbitrators 

Held,  That  it  is  neither  customary  nor  practical  to  guarantee 
Manila  hydraulic  cake  to  have  a  maximum  percentage  of  4  per  cent  to 
6  per  cent  fat.  We  therefore  interpret  the  contract  dated  October  15 
to  mean  that  Seller  guaranteed  Buyer  a  minimum  protein  content  of 
173^2  per  cent,  and  a  fat  content  of  4  per  cent  to  6  per  cent,  and  as  the 
various  analyses  made  by  the  chemist  show  that  both  minimum  guaran- 
tees were  exceeded,  we  are  of  the  opinion  that  B's  claim  in  this 
connection  must  be  disallowed. 

It  seems  to  be  an  established  fact  that  undue  excessive  protein 
content  would  be  injurious  to  feed  materials,  but  in  this  instance,  the 
protein  content  of  the  cake  proffered  by  Seller  to  Buyer  does  not 
contain  such  an  excess  protein  content  as  to  render  it  injurious,  or 
unsuitable,  as  a  feed,  and  the  same  applies  to  the  fat  content  of  the  cake 
tendered.  The  rules  of  the  Interstate  Cotton  Seed  Crushers  Association 
do  not  permit  of  rejection,  or  any  allowance,  on  cake,  where  the  protein 
and  fat  content  exceed  the  percentage  specified  in  contract.  It  should 
also  be  noted  that  Rule  29  of  our  Association  provides  that  quality 
shall  be  equal  to  or  better  than  sample  submitted,  and  the  principle 
underlying  this  rule  can,  with  reasonable  justice  to  all  parties,  be 
applied  to  quality  specified  in  the  body  of  a  contract.  In  other  words, 
if  goods  tendered  are  equal  to  or  better  than  quality  specified  in  con- 
tract, claim  for  rejection  or  allowance  should  be  disallowed.  Buyer's 
rejection  of  the  copra  cake  tendered  ex  sailing  vessel  "Moshulu"  is 
disallowed.    (Foreign  Commerce  Association  Arbitration  No.  5,  1918). 

Description  of  Goods,  Not  Sample,  Controls  When  Sale  Is 

Not  on  Sample — Effect  of  Submitting  Sample — A  sold  to  B  a 
quantity  of  Beans,  the  sale  being  consummated  by  the  interchange 
of  telegrams.    The  quality  was  stated  to  be  "season's  average"  (under 


172  COMMERCIAL   ARBITRATION 

the  1919  Uniform  California  Bean  Contract),  and  Seller  added  in  his 
confirming  message  "like  sample  expressed."  Buyer  objected  to  the 
sample,  declaring  that  it  did  not  grade  according  to  "season's  average." 
Therefore,  there  was  an  objection  on  the  part  of  the  Seller  to  deliver 
a  car  of  "season's  average"  beans,  he  claiming  the  Buyer  had  a  right 
to  assume  that  the  sample  was  representative  of  the  "season's  average"; 
in  other  words,  the  sample  was  to  visualize  the  Seller's  description  of 
the  goods  tendered  as  such  average.  Buyer  claimed  that  had  Seller 
intended  to  sell  a  car  of  beans  on  sample  he  should  not  have  stated 
that  he  was  selling  "season's  average",  as  the  Buyer  had  a  right  to 
assume  that  he  was  buying  on  that  basis  and  no  other.  In  his  sub- 
mission to  the  arbitrators,  Seller  did  not  claim  that  the  sample  sub- 
mitted was  "season's  average"  but  set  up  that  Buyer  refused  the 
sample  and  demanded  a  car  grading  up  to  the  standard  of  "season's 
average"  such  as  would  pass  inspection  by  the  Chamber  of  Commerce 
of  San  Francisco,  whereas  he  had  sold  goods  as  represented  by  the 
sample. 

Held,  That  Buyer  was  justified  in  his  contention  that  he  purchased 
a  car  of  "season's  average"  beans,  and  Seller  was  liable  to  Buyer  for 
the  difference  in  the  market  value  of  the  beans  on  July  30th,  the  date 
upon  which  he  notified  Buyer  he  would  cancel  sale,  namely  $600,  to 
be  paid  forthwith  by  Seller.  (California  Bean  Dealers  Association 
Arbitration  No.  23,  1919). 


REPORTS  173 


Samples  for  Arbitration 

Arbitrators    May    Determine    Sufficiency    of    Samples — The 

general  rule  is  that  Arbitrators  have  the  right  to  determine  the  suf- 
ficiency of  samples  drawn  for  arbitration,  unless  the  parties  specifically 
agree  upon  samples.  In  the  absence  of  such  agreements,  the  association 
to  which  arbitration  is  submitted  arranges  for  representative  sample 
of  the  disputed  goods  to  be  drawn  by  a  disinterested  sampler  and  sent 
to  the  association  headquarters  under  seal  to  be  opened  in  the  presence 
of  the  Arbitrators.  In  sampling  Dried  Fruit,  Canned  Goods,  Beans, 
Rice,  Peanuts,  Copra  Cake  and  Field-Grown  Produce  generally 
it  is  customary  to  sample  5  per  cent  of  the  packages  in  such  manner 
as  to  obtain  an  average  thereof. 

Sampling  of  Copra — In  a  dispute  as  to  quality  of  Copra,  sampling 
must  be  made  by  an  independent  sampler  mutually  agreed  upon,  who 
must  draw  samples  from  at  least  every  tenth  slingload  as  discharged 
from  the  vessel.    (Foreign  Commerce  Association  Rule  No.  204). 

Sampling  (and  Weighing)  Vegetable  Oil — Sampling  (and 
weighing)  of  Vegetable  Oil  in  case  of  dispute  is  provided  for  as  follows: 

"In  case  of  rejection  or  dispute  as  to  quality  or  weights  or  condition 
of  packages,  Seller  shall  be  notified  immediately,  and  shall  be  allowed 
48  hours  after  receipt  of  same,  proper  time  being  allowed  for  trans- 
mission of  communication,  within  which  to  arrange  for  sampling  or 
weighing  or  inspection.  Sampling  or  weighing  shall  be  done  by  such 
person  or  persons  as  may  be  mutually  agreed  upon  and  as  provided 
for  in  the  Rules.    (Foreign  Commerce  Association  Rule  281). 

"If  the  Seller  refuses  or  neglects  for  48  hours  after  notification  tcp 
arrange  for  sampling  or  weighing  or  inspection  as  above,  the  Buyer 
may  appoint  an  official  inspector  or  weigher  of  this  Association  to  draw 
samples  or  to  weigh  in  the  manner  prescribed  in  these  Rules.  Such 
official  inspector  or  weigher  will  be  considered  the  representative  of 
both  Buyer  and  Seller. 

"If  sampling  or  weighing  has  to  be  done  at  a  place  where  no  official 
inspector  or  weigher  of  the  Foreign  Commission  Association  is  available, 
then  Buyer  may  appoint  a  representative  of  any  other  commercial 
body  or  recognized  competent  inspector,  weigher  or  sampler,  and 
when  such  samples  or  weights  are  submitted  with  proper  affidavit 
as  to  all  material  facts  establishing  identity  and  the  condition  of  the 
merchandise,  such  returns  shall  be  considered  authentic."  (Foreign 
Commerce  Association  Rule  277). 


174  COMMERCIAL   ARBITRATION 

Private  Inspectors'  Certificate  Not  Final  With  Arbitrators — 
When  Question  of  Quality  Is  Submitted  Arbitrators  Will 
Decide— A  sold  to  B  1,000  bags  38/40  Chinese  Shelled  Peanuts, 

F.  A.  Q.  of  the  Season  1919,  ex  warehouse  Seattle,  and  a  dispute  arose 
as  to  quality  of  500  bags.  In  the  absence  of  an  agreement  as  to  samples, 
the  same  were  drawn  by  the  representatives  of  the  Foreign  Commerce 
Association.  The  Arbitrators  held  that  the  goods  were  not  a  good 
delivery.  Seller  requested  a  reconsideration  by  the  Arbitrators  on  the 
ground  that,  prior  to  arbitration,  the  parties  had  agreed  upon  an  inde- 
pendent sampling  and  inspection  by  a  certain  public  sampler,  and 
that  the  certificate  of  such  sampler,  showing  the  goods  to  be  F.  A.  Q., 
should  have  been  final.  Seller  also  demanded  that  another  sample  of 
the  goods  in  dispute  be  drawn. 

In  supplemental  findings,  the  arbitrators  said : 

"The  arbitrators  had  presented  to  them  all  of  the  claims  of  the 
parties,  and  especially  the  official  certificate  prepared  by  the  sampler 
viseed  by  the  Foreign  Commerce  Association  and  issued  by  the  Seattle 
Chamber  of  Commerce  and  Commercial  Club,  and  an  individual 
grading  determination  by  another  Seattle  sampler  which  was  not 
viseed  and  issued  as  was  the  first  certificate  mentioned  herein.  The 
arbitrators  in  examining  new  samples  independently  drawn,  deter- 
mined for  themselves  the  quality  of  the  goods  and  found  that  they 
were  not  F.  A.  Q.  of  the  season  1919,  and  therefore  the  contention  of 
the  Seller  with  reference  to  the  certificate  was  not  sustained. 

"Even  had  there  been  an  understanding  as  to  the  finality  of  the  last 
certificate,  such  understanding  was  entirely  abrogated  by  the  parties 
awhen  they  submitted  the  question  of  quality  to  arbitration.  Also  the 
contention  of  Seller  that  the  percentage  of  splits  does  not  enter  into  the 
question  of  quality  was  not  sustained,  as  the  arbitrators  unanimously 
found  that  the  percentage  was  in  excess  of  a  fair  average. 

"Inasmuch  as  Buyer  and  Seller  agreed  to  submit  the  dispute  to 
arbitration  before  the  Arbitration  Committee  of  the  Foreign  Commerce 
Association  and  having  consented  that  said  Association  should  draw 
the  official  samples  for  arbitration,  in  the  opinion  of  the  arbitrators 
it  would  not  be  consistent  nor  would  the  arbitrators  be  justified  in 
calling  for  new  samples,  since  thereby  there  would  be  no  end  to  con- 
troversy as  to  the  sufficiency  of  an  official  sample  drawn  for  the  purpose 
of  determining  quality.  Therefore,  the  arbitrators  decline  further  to 
review  the  matter  and  direct  that  their  finding  shall  be  considered 
as  final."    (Foreign  Commerce  Association  Arbitration  No.  20,  1920). 


REPORTS  175 

Buyer  in  Good  Faith,  Drawing  Samples  for  Arbitration,  Is 
Not  Estopped  from  Maintaining  Claim — A  sold  to  B  a  quantity 
of  Choice  Recleaned  Small  White  Beans,  F.  0.  B.  California  shipping 
point.  Upon  arrival  of  goods  at  Eastern  destination,  Buyer  took 
exception  to  the  quality  and  demanded  arbitration.  At  the  time  he 
objected  to  quality,  Buyer  drew  samples  said  to  represent  the  car. 
He  paid  the  draft  and  thereupon  distributed  the  car  among  four 
buyers.  Seller  took  exception  to  Buyer  drawing  the  sample  for  arbitra- 
tion, which,  under  the  terms  of  the  Uniform  California  Bean  Dealers 
Association  contract  under  which  the  sale  was  made,  should  have  been 
drawn  by  a  disinterested  party.  Seller  claimed  that  Buyer,  by  his 
failure  to  have  samples  drawn  in  the  usual  manner,  forfeited  his  right 
to  demand  arbitration. 

The  matter  coming  properly  before  a  committee  of  the  California 
Bean  Dealers  Association  it  was 

Held,  That  because  Buyer  took  delivery  of  the  car  and  distributed 
it  in  the  most  economical  way,  paying  the  draft  and  relying  upon 
arbitration  to  settle  the  dispute,  he  should  not  be  penalized  for  carrying 
out  the  terms  and  conditions  of  the  contract,  which  provides  that 
Buyer  shall  pay  the  draft  and  arbitrate  any  differences  at  a  later  date, 
provided  that  complaint  is  made  on  arrival  or  within  the  time  specified 
by  contract,  i.  e.,  if  complaint  is  made  within  three  business  days  after 
arrival  of  goods,  Buyer  has  every  right  to  take  delivery  of  the  goods 
and  demand  arbitration  to  determine  the  quality  thereof.  By  so  doing 
he  facilitates  business,  frees  equipment  and  shows  a  proper  confidence 
in  the  principles  of  arbitration  for  prompt  settlement  of  disputes. 

Continuing,  the  arbitrators  commented  as  follows: 

"Preliminary  to  determining  the  question  of  quality  of  the  beans, 
the  arbitrators  feel  that  if  Seller  has  shipped  a  carload  of  beans  to  the* 
Buyer  and  it  is  found  at  destination  that  the  goods  unquestionably 
are  below  grade,  irrespective  of  the  fact  that  the  car  may  have  been 
distributed  and  provided  at  all  times  that  the  quality  of  the  shipment 
can  be  ascertained  by  samples  taken  by  an  efficient  sampler  (a  dis- 
interested party),  the  Buyer  is  entitled  to  consideration  and  the  right 
to  arbitrate  the  question  of  quality  on  samples  which  shall  be 
satisfactorily  established  in  the  minds  of  the  arbitrators  as  being  fair 
samples  of  the  shipment." 

Having  established  by  the  affidavit  of  a  disinterested  person  that 
samples  were  drawn  from  the  identical  shipment  after  distribution 
thereof,  Buyer's  claim  for  allowance  on  account  of  quality  was  awarded 
by  the  arbitrators.  (California  Bean  Dealers  Association  Arbitration 
No.  15,  1921). 


REPORTS  177 


Shipment 


Shipment  Denned  and  Discussed — Shipment  means  the  placing 
of  goods  on  board  a  vessel  destined  for  the  port  intended  for  deliver}', 
or  delivery  to  a  rail  carrier,  and  a  bill  of  lading  issued  therefor.  Stated 
in  a  general  way,  shipment  may  be  said  to  be  effected  when  the  goods 
pass  out  of  the  custody  and  control  of  the  Seller  into  the  possession  of 
a  carrier  for  transportation. 

Shipment  does  not  mean  the  sailing,  steaming  or  clearance  of  a 
vessel.  Thus,  where  a  cargo  has  been  placed  on  board  a  vessel  destined 
for  the  port  of  delivery  within  the  shipping  period  specified  in  the 
contract,  the  subsequent  delay  of  the  vessel,  awaiting  other  cargo  or 
caused  by  any  contingency  unknown  to  the  shipper  or  beyond  his 
control,  will  not  affect  the  time  of  shipment.  The  shipper  does  not 
control  the  movements  of  a  vessel  nor  regulate  its  time  of  clearance, 
sailing  or  steaming.  If  the  shipper  is  charterer  of  the  vessel,  however, 
he  does  control  its  movements. 

Direct  Shipment  means  the  carriage  in  the  same  vessel  of  goods 
from  one  port  to  the  port  of  destination,  and  does  not  contemplate  the 
transshipment  from  one  vessel  into  another.  But  if  transshipment 
be  necessary  as  the  result  of  a  force  majeure  happening,  goods  so 
handled  would  be  considered  as  shipped  'direct,  since  the  contingency 
would  be  beyond  a  shipper's  control,  provided,  of  course,  that  the 
contract  of  sale  exempts  such  contingency. 

It  should  be  borne  in  mind  that  under  the  forms  of  bills  of  lading 
usually  used  by  steamship  carriers,  the  carrier  company  reserves  the 
right  of  forwarding  the  whole  or  any  part  of  the  goods  to  their  destina- 
tion by  any  other  steamer  or  steamers  belonging  to  the  original  carrier 
company  or  any  other  company  or  person,  proceeding  either  directly  or 
indirectly  to  such  port  of  destination,  and  all  risk  of  transshipment, 
landing,  storing  or  reshipment  shall  be  borne  by  the  shipper  or  owner 
of  the  goods.  Also,  it  is  usually  provided  in  bills  of  lading  that  in 
case  of  quarantine  the  goods  may  be  discharged  into  quarantine  depot, 
hulk,  lighter  or  other  vessel  as  required  for  the  carrying  vessel's  despatch ; 
or  should  this  be  found  impractical,  the  vessel  may  proceed  on  its 
voyage  and  land  the  goods  at  the  nearest  safe  port  in  the  master's 
opinion,  at  the  risk  and  expense  of  the  owner  of  the  goods.  Quarantine 
expenses  upon  the  goods  of  whatever  nature  or  kind  and  howsoever 
incurred  shall  be  borne  by  the  owners  of  the  goods  and  paid  before 
delivery,  under  the  bills  of  lading  used  by  many  lines. 


178  COMMERCIAL  ARBITRATION 

It  will  thus  be  seen  that  while  the  term  direct  shipment  may  be  used 
in  contracts,  there  are  many  contingencies  that  may  arise,  clearly 
beyond  the  control  of  a  shipper,  which  are  provided  for  under  bills  of 
lading.  These  contingencies  may  be  of  such  a  nature  that  direct  shipment, 
technically  construed,  could  not  be  accomplished,  notwithstanding 
that  a  shipper  may  have  made  his  contract  of  affreightment  in  good 
faith  with  the  carrier  and  the  goods  have  gone  forward  destined  to  the 
port  named  in  the  contract. 

In  connection  with  rail  shipments,  another  feature  that  deserves 
brief  consideration  is  transshipment  from  the  cars  of  one  carrier  to 
other  equipment,  or  from  a  narrow  gauge  carrier  to  the  equipment  of  a 
standard-gauge  line.  Damage  to  a  freight  car  may  compel  the  transfer 
from  such  car  to  another,  and  at  the  same  time  the  actual  shipment  of 
the  goods  not  be  affected.  So,  also,  the  transshipment  from  one  line 
to  another  necessitated  by  the  difference  in  gauge  of  the  two  rail  car- 
riers. Assuming,  for  example,  that  a  shipment  originated  on  a  narrow- 
gauge  line  requiring  reloading  at  another  point  into  standard  gauge 
equipment  for  transcontinental  or  other  movement,  the  shipment  via 
the  originating  carrier  would  be  the  controlling  factor  and  not  the  re- 
loading into  the  equipment  of  the  connecting  line. 

Indirect  Shipment  means  the  transshipment  of  goods  from  one 
vessel  to  one  or  more  vessels  at  a  port  or  ports. 

Time  of  Shipment  an  Essential  Element  of  Contracts — An 

essential  element  of  commercial  contracts  is  the  time  of  shipment  of 
the  goods  or  the  time  fixed  in  the  contract  for  its  fulfillment.  In  the 
absence  of  a  specified  time  of  shipment  or  delivery  a  reasonable  time 
is  implied,  and  what  is  a  reasonable  time  depends  upon  the  facts  and 
surrounding  circumstances  of  each   contract. 

It  is  customary  for  merchants  in  commerce  to  fix  a  time  for  shipment 
of  goods,  e.  g.  Shipment  October- November  from  Pacific  Coast,  Last  Half 
November  from  Plant,  or  January-February  from  Orient.  Such  terms  fix 
within  the  custom  of  the  particular  trade  involved  the  time  for  shipment 
of  the  goods.  If  the  contract  covers  goods  to  be  shipped  from  the  Orient, 
in  a  named  month  or  during  a  specified  period,  it  is  the  duty  of  the 
Seller  to  see  that  the  goods  are  in  possession  of  a  carrier  for  transporta- 
tion before  the  expiration  of  the  designated  time. 

There  are  likewise  various  terms  employed  in  trade  that  signify 
the  time  of  shipment,  such  as  the  following: 

Quick  Shipment — Within  two  working  days. 

Immediate  Shipment — Within  five  working  days. 

Prompt  Shipment — Within  ten  working  days. 


REPORTS  179 

A  requirement  for  shipment  in  the  "first  half"  of  a  named  month  is 
fulfilled  if  shipment  is  made  any  day  prior  to  midnight  of  the  day 
marking  the  exact  half  of  the  calendar  month,  e.  g.  "first  half"  of 
February  would  be  before  midnight  of  February  14th,  "first  half" 
of  April  would  be  before  midnight  of  April  15th,  "first  half  of  January" 
would  be  before  12  o'clock  noon  of  January  16th.  The  latter  example 
may  be  considered  a  purely  technical  one,  for  the  reason  that  bills  of 
lading  do  not  show  the  hour  of  issue.  It  is  customary  for  shippers  to 
consider  midnight  of  the  fifteenth  day  of  the  month  as  the  time  for 
making  shipment  in  the  "first  half"  of  a  month;  but  it  would  be 
doubtful  if  the  15th  of  February  would  be  considered  the  "first  half" 
of  that  month. 

The  date  of  the  bill  of  lading  is  evidence  of  the  time  of  shipment. 
It  may  be  stated  as  a  general  proposition  that  a  bill  of  lading  reading 
Shipped  on  board  the  Steamer  Y,  etc.,  admits  of  less  doubt  than  a  bill 
of  lading  reading  Received  for  shipment  per  the  Steamer  Y,  etc. 

The  form  of  the  bill  of  lading  is  a  vital  factor,  especially  in  the 
shipment  of  goods  by  ocean  from  one  country  to  another.  A  recent 
court  decision  in  England  (Diamond  Alkali  Export  Corporation  v.  F. 
Bourgeois,  K.  B.  July  1,  1921)  has  sharply  differentiated  between 
received  for  shipment  bills  of  lading  and  shipped  on  board  bills  of  lading. 
Interpreting  what  kind  of  a  bill  of  lading  is  called  for  under  the  English 
Bills  of  Lading  Act  (1855),  the  court  said,  in  effect,  that  a  received  for 
shipment  bill  of  lading  was  a  mere  receipt  for  the  goods.  The  court 
expressed  the  view  that  the  remedy  lies  in  appropriate  contract  clauses 
validating  the  received  for  shipment  bill  of  lading. 

In  many  trades  this  has  been  done.  The  Uniform  Contract  of  the 
Dried  Fruit  Association  of  California  provides  as  follows : 

"On  water  shipments,  bill  of  lading  shall  be  ocean  bill 
of  lading;  an  Overland  or  Sunset  Gulf  shipments,  bill  of 
lading  may  be  either  through  export  bill  of  lading  or  ocean 
bill  of  lading  from  Atlantic  or  Gulf  port  accompanied  by 
certified  copy  of  domestic  inland  bill  of  lading,  covering 
shipment  from  point  of  origin  to  Atlantic  or  Gulf  port.  An 
ocean  bill  of  lading  shall  be  sufficient  if  it  acknowledge  either 
receipt  for  shipment  or  receipt  on  board." 


180  COMMERCIAL   ARBITRATION 

The  issuance  by  a  carrier  of  a  bill  of  lading  is  prima  facie  evidence 
that  the  goods  have  come  into  its  possession.  The  authenticity  of  the 
bill  of  lading  may  be  brought  into  question  by  evidence  of  fraud,  col- 
lusion or  mistake  in  its  issuance,  but  it  is  the  general  rule,  in  commercial 
matters,  to  give  the  date  of  a  bill  of  lading  the  very  highest  considera- 
tion; for  the  lading  is  evidentiary  of  the  goods  themselves.  In  overseas 
commerce  the  bill  of  lading  is  a  document  as  important  usually  as  the 
draft. 

Under  the  provision  of  the  Harder  Act,  a  carrier  incurs  a  penalty 
of  $5,000  for  the  issuance  of  a  bill  of  lading  before  receiving  the  goods 
for    shipment. 

Since  the  time  of  shipment  of  goods  is  a  vital  provision  of  contracts 
it  follows  as  of  course  that  disputes  concerning  it  often  arise,  and 
arbitrators  have  time  and  again  decided  general  principles  applicable 
to  all  trades. 

Notwithstanding  shipped  to  Seller's  order,  goods  sold  F.  0.  B. 
cars  or  F.  O.  B.  vessel  for  transshipment  from  port  of  entry,  are  at  risk 
of  Buyer  from  and  after  delivery  to  carrier  at  port  of  transshipment 
and  upon  issuance  by  carrier  of  bill  of  lading  or  shipping  receipt. 
(Foreign  Commerce  Association  Rule  26). 


REPORTS  181 


Shipment— Direct  and  Indirect 

Withdrawal  of  Regular  Vessels  From  Route  Does  Not 
Justify  Transshipment  Under  Direct  Shipment  Contract — 
Force  Majeure  Does  Not  Operate — A  Pacific  Coast  importer  sold 
to  a  San  Francisco  merchant  a  quantity  of  Colombian  Coffee.  There 
were  two  contracts,  the  first  providing  " Colombia  Coffee,  usual  good 
quality  Medellin  Extra,  at  18  cents  per  lb.  February-March- April 
shipment  from  the  source  to  San  Francisco.  Direct  shipment  to  San 
Francisco."  The  second  contract  called  for  1000  bags  of  Medellin 
Excelso  at  183^  cents  per  lb.,  the  other  terms  of  the  contract  being 
identical  with  the  first. 

As  to  the  contract  for  1000  bags  Medellin  Extra  Coffee,  Buyer 
rejected,  claiming  that  Seller  had  breached  the  contract  in  the  following 
particulars : 

1.  That  shipment  was  not  made  within  contract  time  and  coffee 
was  not  tendered  until  July  28th. 

2.  That  coffee  tendered  for  delivery  was  not  Medellin  Extra. 

3.  That  direct  shipment  from  source  was  not  made  as  it  was  trans- 
shipped en  route. 

Seller  claimed  that  the  coffee  was  shipped  within  contract  time  from 
source,  viz:  Medellin,  Colombia,  and  submitted  documents  showing  it 
was  delivered  to  the  Antioquia  Railroad  at  Medellin  from  March  26th 
to  April  26th,  inclusive.  That  he  tendered  to  Buyer  Medellin  Excelso, 
a  higher  grade  of  the  same  coffee,  at  the  contract  price  for  Medellin 
Extra,  and  that  a  tender  of  a  higher  grade  at  the  price  of  the  lower 
should  be  a  good  delivery. 

That  after  the  contract  was  entered  into  the  permanent  direct  line 
of  steamers  by  which  he  expected  to  ship  the  coffee  discontinued  service 
and  that  he  was  obliged  to  ship  over  two  lines  and  consequently  claimed 
the  operation  of  the  force  majeure  c'ause  of  the  contract. 

Therefore,  Seller  denied  the  right  of  Buyer  to  reject  the  shipment 
in  question. 

Held,  That  the  contract  distinctly  provides  Direct  shipment  to  San 
Francisco.  The  evidence  clearly  shows  that  such  direct  shipment  was 
not  made,  as  the  coffee  was  transshipped  en  route,  and  we  decide  that 
force  majeure,  as  claimed  by  Seller,  does  not  apply  in  this  case. 

We  find  that  Seller  did  not  comply  with  the  terms  of  the  contract 
in  regard  to  making  direct  shipment,  and  we  decide  that  Buyer  has  the 


182  COMMERCIAL   ARBITRATION 

right  to  reject  the  shipment  tendered  by  Seller  ex  "San  Juan"  on  that 
account. 

As  our  decision  on  this  point  decides  the  right  of  Buyer  to  reject, 
which  is  the  question  at  issue,  we  consider  it  unnecessary  to  go  into 
the  other  two  points  upon  which  claim  for  rejection  was  also  made. 
(San  Francisco  Chamber  of  Commerce  Arbitration,  1921.) 

Direct  or  Indirect  Shipment  Permitted  When  Contract  Is 
Silent  on  Routing — Transshipment  Under  C.  I.  F.  Contract — 

A  San  Francisco  importer  sold  another  importer  in  the  same  city  a 
quantity  of  No.  1  Siam  Usual  Rice,  in  bond,  C.  I.  F.  Havana,  Cuba, 
December-January  shipment  from  Hongkong  to  Havana.  Shipment 
from  the  Orient  was  made  in  contract  period,  and  the  goods  were 
transshipped  at  San  Francisco  for  Havana.  Buyer  refused  to  accept 
the  documents  on  presentation  on  the  ground  that  shipment  was  not 
made  direct  to  Havana,  and,  further,  demanded  interest  on  the  amount 
of  invoice  on  account  of  the  delay  in  arrival  of  the  goods  at  destination 
and  also  sought  a  guarantee  from  the  Seller  that  he  would  reimburse 
Buyer  for  any  loss  that  might  accrue  by  reason  of  claims  made  by  the 
ultimate  purchaser  in  Cuba.  Seller  refused  the  claim,  and  maintained 
that,  under  the  terms  of  the  C.  I.  F.  contract,  he  was  entitled  to  ship 
either  direct  or  indirect  by  vessel  and/or  vessels  to  Havana. 

Held,  That  the  contract  does  not  specify  direct  shipment,  and 
therefore  the  Seller  had  the  option  of  transshipping  the  Rice.  Buyer 
is  not  entitled  to  interest  by  reason  of  any  delay  which  might  be  in- 
curred in  shipping  the  rice  via  San  Francisco,  but  must  accept  the  Rice 
at  full  contract  price.  (Rice  Association  of  California  Arbitration 
No.   28,    1920). 


REPORTS  ISo 


Shipment,  Time  of 


Date  of  Bill  of  Lading  or  Shipping  Receipt  Final  as  to  Date  of 
Shipment — The  general  rule  as  to  date  of  shipment  is  that  the  date 
of  bill  of  Lading  or  shipping  receipt  is  final  as  to  date  of  shipment,  in 
the  absence  of  fraud,  collusion  or  mistake. 

Rule  No.  9  of  the  Foreign  Commerce  Association  reads:  "The 
date  of  ocean  bill  of  lading  showing  goods  on  board  shall  be  evidence 
of  time  of  shipment." 

When  sale  provides  for  a  given  time  of  shipment  from  abroad,  unless 
based  upon  "payment  in  exchange  for  ocean  documents"  Seller  has  the 
option  of  filling  contract  with  goods  shipped  earlier  than  contract 
period,  provided  time  of  delivery  is  approximately  the  same.  (Foreign 
Commerce  Association  Rule  10.) 

Should  Seller  fail  to  ship  within  contract  period,  unless  for  reasons 
beyond  his  control,  Buyer  may,  after  48  hours  (Saturday  afternoons, 
Sundays  and  holidays  excepted)  from  receipt  by  Seller  of  telegraphic 
advice,  either  purchase  for  Seller's  account  through  a  reputable  broker, 
or  cancel  that  portion  of  the  contract  on  which  Seller  has  defaulted, 
any  expense  in  connection  therewith  to  be  for  Seller's  account. 
(Foreign  Commerce  Association  Rule  12). 

Applies  to  Domestic  Shipment — The  Uniform  Vegetable  Oil  Rules 
of  Foreign  Commerce  Association  of  Pacific  Coast,  the  New  York 
Produce  Exchange  and  the  Interstate  Cottonseed  Crushers  Association 
make  the  date  of  bill  of  lading  applicable  to  domestic  shipment.  Foreign 
Commerce  Association  Rule  No.  257  reads:  "The  date  of  bill  of 
lading  shall  be  considered  as  the  date  of  shipment,  this  to  apply  to  the 
shipment  of  the  merchandise  as  well  as  to  the  forwarding  of  empty 
tank  cars." 

Under  a  contract  calling  for  August  shipment  from  Manila,  it  was 
held  that  shipment  of  a  portion  of  a  cargo  of  Phillippine  Whole  Coco- 
nuts on  ( Vt .  1st  was  justified,  the  first  carrier  having  shut  out  a  portion 
of  the  cargo  following  a  typhoon  during  loading,  the  Seller  not  being 
responsible  for  delayed  shipment  under  the  "Casualty  clause"  of  the 
Uniform  Contract  of  the  Foreign  Commerce  Association  of  the  Pacific 
Rule  2).  The  original  or  first  bill  of  lading  specified  the  entire 
quantity  of  nuts  tendered  to  the  carrier,  but  bore  the  notation  subject 
to  production  and  condition  of  mate's  receipt.  This  receipt  specified 
only  the  number  and  tonnage  of  nuts  actually  loaded  on  the  first  carrier 


184  COMMERCIAL   ARBITRATION 

and  bore  the  notation  All  in  bad  order  and  condition.     (Foreign  Com- 
merce Association  Arbitration  No.  33  and  33 A  1921,  Page  205). 

Rejection  of  Chinese  Shelled  Peanuts  purchased  under  a  C.  I.  F. 
Seattle  contract,  January-February  shipment  from  Hongkong,  because 
bill  of  lading  was  dated  January  31st,  whereas  vessel  on  which  shipment 
was  made  did  not  actually  sail  from  Hongkong  until  Febuary  13th  was 
not  sustained  in  the  absence  of  a  showing  of  fraud  on  the  part  of  Seller 
or  his  supplier  or  collusion  with  the  steamship  company  in  connection 
with  the  date  of  bill  of  lading.  (Foreign  Commerce  Association 
Arbitration  No.  14,  1920,  Page  193). 

A  Buyer  who  gives  notice  of  rejection  of  a  shipment  of  Dried  Fruit 
because  Seller  failed  to  supply  private  labels  on  the  entire  shipment, 
and  failure  having  been  occasioned  by  Buyer's  neglect  to  furnish  boxing 
specifications  in  time  to  permit  affixing  such  labels,  is  estopped  from 
setting  up  a  violation  in  the  time  of  shipment  clause  in  the  contract  in 
support  of  his  rejection,  he  having  refused  to  accept  a  valid  tender  in 
time  to  obtain  bill  of  lading  dated  within  contract  period.  (Dried 
Fruit  Association  of  California  Arbitration  No.  14,  1920,  Page  187). 

Seller's  contention  that  he  was  prevented  fulfilling  an  August- 
September  shipment  of  Apricot  Kernels  within  shipping  period  by 
reason  of  a  shortage  in  rail  equipment  was  not  sustained,  and  Seller 
was  penalized  for  delaying  shipment  until  November,  there  being 
nothing  in  the  contract  protecting  him  for  such  contingency  as  car 
shortage.     (Dried  Fruit  Association  Arbitration  No.  7, 1920,  Page  191). 

Rejection  by  Buyer  of  a  full  cargo  of  Copra  sold  for  October- 
November-December  shipment  was  sustained  upon  proof  that  loading 
of  the  vessel  was  not  begun  until  January  5th,  notwithstanding  that 
the  bill  of  lading  was  dated  December  31st  and  regardless  of  Seller's 
contention  that  the  vessel  was  alongside  and  the  cargo  ready  to  load 
and  that  he  was  prevented  from  effecting  shipment  because  of  con- 
tengencies  beyond  his  control.  (San  Francisco  Chamber  of  Commerce 
Arbitration,  1921;  also  San  Francisco  Chamber  of  Commerce  Arbitra- 
tion Appeal,  1921,  Page  195). 

Under  a  contract  calling  for  shipment  of  Dried  Fruit  "first  half  of 
October"  rejection  by  Buyer  was  not  sustained  when  it  was  shown  that 
vessel  was  scheduled  to  sail  October  14th,  that  bill  of  lading  was  dated 
October  14th,  but  vessel  was  delayed  due  to  congestion  of  cars  and 
inability  to  complete  loading  of  vessel.  (Diied  Fruit  Association  of 
California  Arbitration  No.  228,  1914,  Page  189). 


REPORTS  185 

Under  an  F.  O.  B.  California  point  contract  calling  for  prompt 
shipment  of  Beans,  rejection  on  the  ground  of  delay  in  shipment,  in- 
structions having  been  given  October  11th  and  shipment  not  being 
made  until  October  24th,  was  not  sustained,  it  being  shown  that 
(1)  the  instructions  were  not  received  by  shipper  until  5:51  p.  m.  on 
the  11th;  (2)  the  12th  was  a  holiday  and  (3)  the  13th  fell  on  Sunday,  so 
that  the  ten-day  period  permitted  for  prompt  shipment  did  not  begin 
until  the  14th  and  therefore  shipment  made  on  the  24th  was  within  the 
meaning  of  the  term  prompt.  (California  Bean  Dealers  Association 
Arbitration  No.  16,  1918,  Page  198). 

A  principal  will  not  be  excused  from  delay  in  shipment  under  a 
contract  calling  for  immediate  shipment  because  his  broker  failed  to 
advise  that  his  sales  memorandum  specified  immediate  shipment, 
and  he  cannot  make  a  second  tender  after  the  immediate  shipping 
period  has  elapsed.  (California  Bean  Dealers  Association  Arbitration 
No.  19,  1918,  Page  33). 

Rejection  of  a  quantity  of  Manila  Coconuts,  under  contract 
for  shipment  in  the  month  of  August,  on  the  ground  that  shipment 
was  not  made  as  to  a  portion  of  the  coconuts  until  October  1st,  was 
not  sustained  on  appeal  from  a  contrary  award  upon  a  showing  that 
the  entire  cargo  had  been  tendered  a  carrier,  a  bill  of  lading  issued  and 
during  the  loading  a  typhoon  occurred,  the  vessel  thereafter  shutting 
out  a  portion  of  the  cargo.  The  remaining  cargo  was  shipped  on  the 
next  available  steamer.  Arbitrators  held  that  the  provisions  of  the 
"Casualty  Clause"  absolved  Seller  of  responsibility  for  the  delay  in 
time  of  shipment.  (Foreign  Commerce  Association  Arbitration  No. 
33A,  1921,  Page  205). 

Under  a  contract  calling  for  March  shipment  from  the  Orient 
of  Rice,  shipment  on  April  9th  was  held  to  be  within  the  life  of  the 
contract  under  a  printed  clause  providing  Variation  of  ten  days  in  time 
of  shipment  or  arrival  not  to  constitute  grounds  for  rejection.  (San 
Francisco  Chamber  of  Commerce  Arbitration  on  Appeal  from  Rice 
Association,  1920,  Page  217). 

New  evidence  as  to  time  of  shipment  will  be  received  by  the 
Committee  on  Appeals  of  the  San  Francisco  Chamber  of  Commerce, 
notwithstanding  that  the  rules  of  arbitration  of  the  Rice  Association 
of  California  (a  subordinate  association  affiliated  with  the  Chamber 
of  Commerce)  fix  a  limit  of  five  days  for  the  production  of  new  evidence, 
the  Committee  on  Appeals  taking  the  position  that  the  purpose  of 
commercial  arbitration  is  to  do  substantial  justice  between  the  parties. 


186  COMMERCIAL   ARBITRATION 

(San  Francisco  Chamber  of  Commerce  Arbitration  on  Appeal,  1920, 
Page  217). 

Failure  to  ship  Rice  in  contract  time  because  of  heavy  rains,  followed 
by  flood  conditions  which  interfered  with  river  navigation,  is  excused 
under  "Extension  of  Time"  Clause  of  Uniform  Contract  of  Rice  Asso- 
ciation of  California.  (Rice  Association  of  California  Arbitration  No.  4, 
1921,  Affirmed  on  Appeal,  Page  88). 

Delay  in  shipment  of  Chinese  Shelled  Peanuts  consented  to  by 
Buyer  cannot  subsequently  be  set  up  by  him  as  valid  cause  for  rejection 
on  account  of  late  shipment.  (San  Francisco  Chamber  of  Commerce 
Arbitration,  1920,  Page  215). 

Rejection  of  Rice  sold  for  February-March-April  shipment  on 
the  ground  that  the  vessel  did  not  arrive  at  Hong  Kong,  the  port  of 
origin,  until  May  4th  and  did  not  leave  until  May  7th,  was  not  sus- 
tained, Seller  having  shown  that  he  had  engaged  his  freight  space 
January  9th,  that  the  vessel  was  scheduled  to  leave  in  April  and  that 
the  rice  was  delivered  to  the  carrier  and  a  bill  of  lading  issued  April 
20th,  arbitrators  stating  that  the  date  of  bill  of  lading  is  accepted 
by  the  trade  as  date  of  shipment,  unless  fraud  is  shown.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1920,  Page  74). 

Actual  delivery  of  goods  to  a  vessel  and  the  loading  thereof  on  board 
constitutes  shipment  by  a  Seller,  and  when  it  can  be  shown  that  this 
was  done  in  any  particular  case  within  the  required  time,  the  date  of 
the  bill  of  lading  need  not  be  considered  as  the  date  of  shipment.  (San 
Francisco  Chamber  of  Commerce  Arbitration  on  Appeal,  1920, 
Page  217). 

Penalty   for   Late   Shipment — Verbal   Agreement   Governs — 

A  sold  to  B  a  quantity  of  Dried  Fruit  for  September  shipment,  and 
at  the  time  of  sale  was  advised  by  B  that  the  goods  were  for  a  purchase 
in  Stockholm.  It  was  mutually  agreed  that  A  would  protect  B  against 
any  loss  occasioned  by  the  failure  of  A  to  make  delivery  within  contract 
period.  A  did  deliver  approximately  one-half  of  the  contract  quantity 
on  September  30th  and  the  remainder  October  5th.  Subsequently 
the  Stockholm  purchaser  objected  to  the  delivery  outside  the  contract 
time  and  demanded  an  allowance  of  the  prevailing  basis  price,  a  dif- 
ference of  about  $350.  Further  negotiations  resulted  in  his  final  offer 
to  settle  for  1,000  Kronen,  or  about  $266,  a  claim  which  A  rejected. 


REPORTS  187 

Upon  the  submission  to  arbitration,  A  acknowledged  that  there  had 
been  a  verbal  agreement  with  B  that  if  the  Stockholm  merchant  should 
make  a  reasonable  claim  because  part  of  the  goods  went  forward  under 
an  October  bill  of  lading,  when  the  contract  called  for  September 
shipment,  A  would  "stand  behind  B."  A  made  a  further  point  that 
"no  definite  agreement  as  to  the  amount  of  this  allowance  was  made 
either  verbally  or  in  writing."  B,  on  the  other  hand,  produced  a  letter 
to  A  under  date  of  October  9th  stating  his  position  with  relation  to 
the  probable  claim  on  account  of  late  shipment,  a  communication  not 
excepted  to  by  A  in  his  acknowledgment  thereof. 

Held,  That  all  other  questions,  such  as  Seller's  inability  to  obtain 
steamer  space,  are  waived  by  the  verbal  agreement  admitted  by  the 
parties,  and  the  fact  that  a  definite  amount  was  not  named  at  the  time 
in  no  way  alters  A's  responsibility  to  protect  B,  because,  at  the  time 
the  verbal  agreement  was  entered  into,  the  claim,  if  any,  as  to  amount 
was  problematical.  The  claim  of  the  Stockholm  merchant  is  not 
"unreasonable"  and  B  is  entitled  to  reimbursement  therefor.  (Dried 
Fruit  Association  of  California  Arbitration  No.  126,  1912). 

Seller  Not  Responsible  for  Buyer's  Laches — A  sold  B  a  quantity 
of  Dried  Fruit,  October  shipment  from  Pacific  Coast.  Under  the 
terms  of  the  contract  B  was  allowed  to  change  boxing  specifications, 
provided  A  received  such  changed  specifications  by  September  1st. 
B  did  not  furnish  his  specifications  until  October  4th,  19th  and  22nd, 
and  A  diligently  undertook  to  comply  therewith  and  use  the  labels 
specified.  A  contended  that  as  a  result  of  this  effort  on  his  part,  made 
at  B's  request,  he  was  unable  to  effect  October  shipment  with  all  of 
the  boxes  labelled  according  to  specifications  and  that  he  was  justified 
in  making,  delivery  either  in  blank  boxes  or  under  his  own  brand  as 
the  necessity  might  determine. 

In  discussing  this  case,  the  arbitrators  said: 

"The  arbitators  have  applied  the  following  well  established  rule 
of  law,  viz: 

"  'Where  a  party  stipulates  that  another  shall  do  a  certain 
thing,  he  thereby  impliedly  promises  that  he  will  himself  do 
nothing  which  will  hinder  or  obstruct  that  other  in  doing  that 


188  COMMERCIAL   ARBITRATION 

thing,  and  indeed  if  the  situation  is  such  that  the  co-operation 
of  one  party  is  an  essential  pre-requisite  to  performance  by 
the  other,  there  is  not  only  a  condition  implied  in  fact  qualify- 
ing the  promise  of  the  latter,  but  also  an  implied  promise  by 
the  former  to  give  the  necessary  co-operation.' 

"There  was  an  implied  obligation  on  the  part  of  the  Buyer  to  see 
that  labels  were  supplied  in  ample  time  and  the  failure  of  Buyer  to 
live  up  to  this  obligation  justified  the  Seller  in  making  delivery  in 
either  blank  boxes  or  under  his  own  brand." 

Held,  That  while  A  acted  under  and  endeavored  to  comply  with  B's 
specifications  and  undertook  to  use  B's  labels  which  were  not  obtain- 
able until  the  closing  days  of  October,  it  was  an  act  of  grace  on  A's 
part,  he  is,  therefore,  absolved  by  the  rule  above  quoted  from  the 
consequences  of  failure  to  use  B's  labels  on  a  portion  of  the  boxes.  The 
contention  of  B  that  he  is  entitled  to  reject  the  shipment  because  of 
inability  to  obtain  October  bill  of  lading  is  untenable  in  view  of  the 
fact  that  as  this  was  a  proper  delivery  under  the  contract  he  should 
have  accepted  the  car,  in  which  case  he  would  have  received  October 
bill  of  lading,  since  car  was  loaded,  and  contract  would  have  been 
completed.  (Dried  Fruit  Association  of  California  Arbitration  No.  14, 
1920). 

Postponement  of  Vessel's  Sailing — Seller  Not  Responsible 
for  Late  Shipment — A  sold  to  B  a  quantity  of  Dried  Fruit  under 
the  1912  Uniform  California  Dried  Fruit  Contract,  water  shipment, 
shipment  via  California  Atlantic  S.  S.  Company  line  during  August- 
September,  1912.  The  original  contract  was  modified  by  mutual  con- 
sent, permitting  Seller  to  ship  by  steamer  of  named  line  scheduled  to 
sail  about  October  9th.  The  fruit  was  shipped  from  Fresno  September 
30th,  arriving  at  the  San  Francisco  dock  October  3rd.  On  the  4th  it  was 
duly  inspected  and  certificated  as  to  grade.  The  goods,  however,  did 
not  go  forward  on  October  9th,  owing  to  the  fact  that  the  S.  S.  "Lucken- 
bach"  scheduled  to  sail  on  that  date,  was  withdrawn,  her  sailing  being 
postponed  until  the  25th  and  thereafter  again  altered  to  October  20th. 
No  steamer  sailed  on  the  9th.  September  27th  Seller  learned  that 
October  9th  vessel  had  been  postponed  until  the  25th,  and  immediately 
wired  Buyer  this  information,  also  adding  "absolutely  impossible  secure 
space  Pacific  Mail.  Shall  we  hold  25th  or  ship  American-Hawaiian 
October  13th,"  to  which  Buyer  replied  on  the  same  date:     "Cannot 


REPORTS  189 

accept  purchase.  Consider  contract  cancelled.71  September  30th  Seller 
replied  to  this  telegram,  pointing  out  that  as  the  October  9th  sailing 
had  been  postponed  Buyer  was  not  released  under  the  express  provision 
of  the  contract  covering  such  contingency.  Buyer  not  replying  thereto, 
Seller  wired  October  2nd,  urging  reply,  which,  not  being  received,  he 
again  wired  October  3rd  informing  Buyer  that  he  had  been  able  to 
secure  space  on  S.  S.  "Mackinaw"  scheduled  for  October  12th.  The 
same  date  Buyer  advised:  "We  consider  contract  cancelled  unless  goods 
shipped  according  to  modification  of  contract." 

In  support  of  his  contention,  Buyer  claimed  that,  having  voluntarily 
made  one  modification  as  to  time  of  shipment  the  " Responsibility' ' 
clause  in  the  contract  was  not  applicable;  that  shipper  did  not  act  in 
good  faith  in  that  he  did  not  give  correct  information  as  to  sailing  dates 
of  steamer  and  offered  as  evidence  of  the  fact  a  letter  from  the  steam- 
ship company's  New  York  office. 

Held,  That  after  corroborating  all  dates  of  steamers  and  changes  in 
sailing  dates  from  the  steamship  company,  the  Seller,  instead  of  being 
guilty  of  laches,  has  at  all  times  done  all  in  his  power  to  expedite  the 
shipment.  The  information  of  sailing  dates  as  given  Buyer  was  abso- 
lutely correct  as  evidenced  by  the  steamship  company.  The  goods 
were  shipped  by  the  "first  available  steamer"  and  in  exact  accordance 
with  the  terms  of  the  contract.  Buyer's  own  statement  of  the  case 
makes  it  clear  that  his  position  is  unjustified  and  upon  the  whole 
evidence  we  cannot  but  feel  that  his  claim  was  frivolous,  untenable  and 
never  should  have  been  the  subject  of  arbitration.  (Dried  Fruit  Asso- 
ciation of  California  Arbitration  No.  109,  1912). 

Shipment  "First  Half  October"  Does  Not  Mean  Sailing  or 
Steaming — Effect  of  Car  Congestion — Date  of  Bill  of  Lading — 

A  sold  to  B,  under  the  Uniform  Dried  Fruit  Contract  for  water  ship- 
ment, dated  May  14,  1914,  a  quantity  of  Dried  Fruit.  The  contract 
called  for  delivery  to  be  made  to  steamer  from  San  Francisco,  steamship 
company's  dock,  Pacific  Coast  Port(s)  first  half  October,  1914.  Buyer 
contended  that  Seller  had  not  complied  with  the  contract  in  that  the 
Atlantic  and  Pacific  Steamship  Company's  steamer  "Santa  Clara" 
was  not  scheduled  to  sail  until  October  16th,  and  that  the  bill  of  lading 
was  dated  October  14th.  The  record  showed  that  the  goods  were  de- 
livered to  the  carrier  on  October  14th,  inspected  by  the  Dried  Fruit 
Association  of  California,  and  certificate  issued  on  the  15th.  The  bill 
of  lading  was  dated  October  14th.  Buyer  contended  that  Seller  had  not 
met  his  contractual    obligation    by  shipping    per  a  steamer  leaving 


190  COMMERCIAL   ARBITRATION 

after  the  expiration  of  the  first  half  of  October.      Seller  claimed  the 
application  of  the  following  clause  in  the  water  shipment  contract: 

"On  sales  made  by  water  from  Pacific  Coast  points the  bill  of 

lading  shall  be  deemed  conclusive  evidence  of  shipment  on  the  date  it  bears." 

There  was  submitted  to  the  Arbitrators  a  letter  from  the  steamship 
company  stating  that  the  S.  S.  "Santa  Clara"  was  originally  scheduled 
to  sail  October  14th,  and,  further,  that  the  delay  was  due  to  congestion 
of  cars  and  the  carrier's  inability  to  complete  loading  of  other  cargo  in 
time  to  sail  on  October  14th. 

Held,  That  Seller  fully  complied  with  all  contract  requirements 
and  there  was  no  merit  in  the  contention  of  the  Buyer.  (Dried  Fruit 
Association  of  California  Arbitration  No.  228,  1914). 

"First  Available  Steamer"  Shipment  Denned — Seller's  Fault 
if  Vessel  Is  Missed — A  sold  B  a  quantity  of  Prunes  under  two  con- 
tracts dated  January  27th,  and  specifying  "shipment  first  available 
steamer."  Buyer  contended  that  goods  were  not  shipped  on  the  first 
available  steamer  and  therefore  the  contract  was  breached  by  Seller. 
The  record  showed  that  immediately  sale  was  made  Seller  made  a  con- 
tract of  affreightment  with  the  American-Hawaiian  Steamship  Com- 
pany on  a  vessel  scheduled  to  sail  February  19th.  The  goods  were 
shipped  from  San  Jose  on  February  18th  and  the  records  of  the  rail 
carrier  showed  that  they  arrived  at  San  Francisco  on  the  evening  of 
the  19th,  and  were  delivered  to  the  "Belt  Line"  3:10  p.  m.  on  the  20th, 
too  late  for  the  steamer  on  which  space  had  been  engaged,  which  was 
clearly  the  first  available  steamer. 

Held,  That  the  contract  is  clear  as  to  time  of  shipment,  and  from 
the  record  it  is  evident  Seller  did  not  comply  therewith.  It  likewise 
provides  that  the  bill  of  lading  shall  be  conclusive  evidence  of  shipment 
on  the  date  it  bears.  The  bills  of  lading  in  this  case  are  dated  February 
26th  and  the  goods  went  forward  by  steamer  on  the  29th,  which  was 
not  the  first  available  steamer.  Buyer  cannot,  therefore,  be  called  upon 
to  accept  these  goods  and  no  allowance  granted  would  be  fair  to  him, 
when  he  demands  rejection.  It  was  the  shipper's  duty  to  ship  in  accord- 
ance with  the  contract  unless  he  could  obtain  the  written  consent  of 
Buyer  to  an  extension  of  time. 

As  shipment  did  not  constitute  a  delivery,  Buyer  is  released  from 
both  contracts.  (Dried  Fruit  Association  of  California  Arbitration  No. 
257,  1915). 


REPORTS  191 

Inability  to  Obtain  Cars  No  Excuse  for  Late  Shipment — 
Seller  Penalized — A  sold  B,  a  Rotterdam,  Holland,  merchant,  a 
quantity  of  Apricot  Kernels  for  August-September  shipment.  Ship- 
ment was  not  effected  until  November  6th,  Seller  claiming  that  inability 
to  obtain  cars  caused  the  delay.  B  demanded  an  allowance  on  account 
of  late  shipment. 

Held,  That  there  being  nothing  in  the  contract  providing  for  relief 
of  Seller  for  inability  to  obtain  cars,  his  contention  that  the  delay  was 
caused  by  such  lack  of  cars  cannot  be  considered,  and  Buyer  is  entitled 
to  reimbursement  in  the  sum  of  $2.00  per  100  pounds,  which  in  the 
circumstances,  is  a  reasonable  and  just  claim,  and  therefore  is  allowed. 
(Dried  Fruit  Association  of  California  Arbitration  No.  7,  1920). 

"August-September  Shipment' '  Not  Fulfilled  by  October  1st 
Shipment — Day's  Time  an  Important  Variation  in  Contract — 
Rejection  Permitted — A  sold  B  a  quantity  of  Dried  Fruit,  August- 
September  (1919)  shipment  from  Pacific  Coast.  B  rejected  the  goods 
tendered  on  the  ground  that  shipment  was  not  in  conformity  with  the 
contract,  i.  e.,  that  it  was  not  made  until  October  1st.  A  contended 
that  the  shipment,  having  been  made  October  1st,  only  one  day  late, 
he  was  protected  under  the  general  clause  in  the  Uniform  Dried  Fruit 
Contract  reading  as  follows: 

"No  unimportant  variation  in  the  performance  of  this  contract  shall 
constitute  basis  for  a  claim.11 

A  further  contended  that,  while  the  goods  were  packed  and  read}' 
for  shipment  within  contract  period,  there  was  a  shortage  of  cars  which 
prevented  shipment.  B  pointed  out  that  the  goods  had  been  purchased 
by  him  for  export  and  time  of  shipment  was  a  vital  provision  in  the 
contract. 

Held,  That  the  clause  in  the  contract  cited  by  A  is  not  applicable, 
since  a  delivery  on  the  1st  of  October  under  a  contract  which  provides 
for  August-September  shipment,  cannot  be  considered  as  an  unimportant 
variation.  The  contention  that  goods  were  ready  for  shipment  but  were 
unshipped  because  of  car  shortage  is  of  itself  not  sufficient,  since  the 
contract  provides  that  in  such  case,  Seller  must  notify  Buyer  before  the 
expiration  of  shipping  date.  Rejection,  therefore,  is  sustained.  (Dried 
Fruit  Association  of  California  Arbitration  No.  2,  1919). 

Date  of  Clearance  Not  Date  of  Shipment — Seller  Cannot 
Guarantee  Actual  Sailing — A  sold  to  B  a  quantity  of  Japanese 
Kotenashi  Beans  for  " December- January-February  shipment  from 
the  Orient."    B  rejected  the  tender  on  the  grounds,  first,  that  goods 


192  COMMERCIAL   ARBITRATION 

were  not  shipped  within  contract  period,   and  second,   that  tender 
was  not  made  within  a  reasonable  time  after  arrival  of  vessel. 

Seller  submitted  a  copy  of  the  bill  of  lading  of  the  "Nippon  Yusen 
Kabushiki  Kaisha,"  dated  at  Otaru  February  23,  1919,  covering 
goods  shipped  ex  S.  S.  "Toyoha-hi  Mam"  to  be  transhipped  into  the 
S.  S.  "Kaifuku  Maru"  or  subsequent  steamers  at  Yokohama,  Seattle 
being  the  port  of  destination.  Buyer  contended  that  the  S.  S.  "Kaifuku 
Maru"  was  not  cleared  by  the  customs  at  Yokohama  until  March  3, 
1919,  whereas  the  contract  specifically  required  shipment  "not  later 
than  December- January-February  shipment  from  the  Orient."  Buyer's 
contention,  therefore,  was  that  the  date  of  the  vessel's  clearance  from 
Yokohama  was  the  date  upon  which  the  goods  were  shipped  "from  the 
Orient."    As  to  this  point  it  was 

Held,  That  trade  custom  does  not  support  this  contention,  but 
on  the  contrary  invariably  accepts  the  date  of  the  bill  of  lading  as  the 
date  of  shipment.  In  this  connection  the  steamship  company  specifically 
reserves  for  its  steamers  "liberty  to  call,  touch  and  stay  at  any  inter- 
mediate port  or  ports  whether  in  or  out  of  the  customary  route  of  the 
voyage."  Manifestly  it  would  be  unfair  to  insist  that  the  shipper 
guarantee  actual  sailing,  steaming  or  clearance  of  any  vessel  over  which 
he  had  no  control  at  or  upon  any  particular  date.  A  shipper  performs 
his  obligation  when  he  tenders  goods  to  the  carrier  and  obtains  a  bill 
of  lading  therefor  within  the  time  limit  fixed  by  the  contract.  This,  in 
in  the  opinion  of  the  arbitrators,  is  a  logical  and  just  conclusion,  for 
were  it  otherwise,  a  vessel  might  proceed  to  another  Oriental  port  after 
it  had  actually  cleared  for  a  Pacific  Coast  port,  a  circumstance  entirely 
beyond  control  of  shipper,  notwithstanding  that  he  had  exercised  every 
diligence  in  making  shipment.  Therefore,  the  arbitrators  accept  the 
date  of  lading  as  the  date  of  shipment. 

The  second  cause  of  rejection  raised  by  Buyer  was  unreasonable 
delay  in  delivery.  The  S.  S.  "Kaifuku  Maru"  arrived  at  Seattle 
March  26,  1919,  and  tender  of  goods  was  made  April  15,  1919,  seventeen 
business  days  having  elapsed  between  the  date  of  arrival  and  the  date 
of  tender  of  delivery  order  for  the  goods. 

Held,  That  tender  was  not  made  within  a  reasonable  time  and  that 
Seller  did  not  exercise  due  diligence  in  making  tender.  Indeed,  Seller 
does  not  claim  that  any  unusual  circumstances  interfered  with  making 
the  tender.  On  the  contrary  Seller  insisted  that  the  contract  did  not 
require  that  he  tender  documents  within  any  specified  time.  Neverthe- 
less, the  arbitrators  are  of  the  opinion  that  the  failure  to  make  prompt 
tender,  in  the  absence  of  unavoidable  reasons  therefor,  in  this  instance 


REPORTS  193 

seventeen  (17)  business  days  being 'permitted  to  elapse  between  arrival 
and  tender,  was  an  unreasonable  delay  and  constituted  a  degree  of 
negligence  on  the  part  of  Seller  that  fully  justified  Buyer's  rejection. 
(California  Bean  Dealers  Association  Arbitration  No.  15,  1919). 

Bill  of  Lading  Evidence  of  Shipment — A  sold  B  a  quantity  of 
Chinese  Shelled  Peanuts,  ex  dock  San  Francisco  or  Seattle,  January- 
February  shipment  from  the  Orient,  and  delivery  was  tendered  ex  the 
S.  S.  "Eastern  Planet",  which  arrived  at  Seattle  on  or  about  March 
12,  1920.  On  examination  by  Buyer,  nuts  were  found  deficient  in 
grade.  Seller  then  stated  that  he  had  another  lot  arriving  on  the  S.  S# 
"Eastern  Maid",  February  shipment  from  Japan,  which  was  accepted 
in  lieu  of  the  first  tender  by  Buyer,  providing  Seller  furnished  bill  of 
lading  showing  that  shipment  was  made  within  contract  time.  This 
Seller  did  and  the  original  bill  of  lading  was  submitted  by  him  as  part 
of  the  evidence  in  this  arbitration.  Buyer  claimed  to  have  learned  from 
the  steamship  agents  that  the  "Eastern  Maid"  did  not  in  fact  sail 
from  Kobe  until  March  15th,  and  that  therefore  he  was  not  obligated 
to  accept  shipment  unless  it  was  conclusively  proven  that  the  vessel 
was  actually  scheduled  to  sail  in  February,  maintaining  that  if 
scheduled  to  sail  in  March  fraud  was  committed  in  the  issuance  of  a 
February  bill  of  lading.  Seller  offered  in  evidence  a  letter  from  his 
supplier  quoting  a  cable  from  his  office  in  Japan,  reading  as  follows : 

"  'Eastern  Maid'  scheduled  sailing  this  port  twenty-seventh  February 
but  delayed  engine  trouble" 

Held,  That  Buyer  has  no  just  ground  for  rejection.  In  the  absence 
of  fraud,  the  date  of  the  bill  of  lading  is  conclusive  evidence  of  the  date 
of  shipment,  because  it  designates  the  date  when  the  goods  passed  out 
of  the  custody  and  control  of  the  Seller.  If  thereafter,  for  any  cause, 
sailing  is  delayed  or  the  goods  fail  to  go  forward,  the  Seller  cannot  be 
held  responsible.  In  this  case  there  is  no  evidence  of  fraud  and  no 
confirming  evidence  supporting  Buyer's  information  from  the  agents. 
On  the  contrary,  Seller  not  only  offers  his  bill  of  lading  in  good  faith, 
but  supplies  cable  definitely  showing  the  sailing  date  and  explaining 
the  delay  in  actual  sailing.  (Foreign  Commerce  Association  Arbi- 
tration No.  9,  1920.) 

Bill  of  Lading  Date  Governs  in  Absence  of  Fraud — A  sold  B 

a  quantity  of  Chinese  Shelled  Peanuts,  C.  I.  F.  Seattle,  inspection 
and  acceptance  upon  arrival.  Buyer  contended  that  shipment  was  not 
made  within  contract  period,  and  he  raised  a  further  point  as  to  the 
quality  of  the  goods  delivered.  Shipment  was  made  from  Hongkong 
per  S.  S.  "Inconium".  The  bill  of  lading  was  dated  January  31, 1920,  at 


194  COMMERCIAL   ARBITRATION 

Hongkong,  but  the  steamer  did  not'  arrive  at  Hongkong  until  February 
9th  and  sailed  from  there  about  February  13th.  Buyer  did  not  submit 
proof  of  any  fraud  on  the  part  of  Seller  or  his  supplier  in  connection 
with  the  date  of  bill  of  lading,  nor  did  he  allege  any  such  fraud  or 
collusion  with  the  steamship  company.     The  aibitrators  said: 

"The  delay  between  the  dating  of  the  bill  of  lading  and  the  actual 
arriving  of  the  steamer  at  Hongkong  is  something  which  might  well 
have  been  beyond  the  Seller's  control,  and  in  the  absence  of  any  proof 
to  the  contrary,  the  custom  of  the  trade,  that  date  of  bill  of  lading 
be  proof  of  time  of  shipment,  must  prevail.  Therefore,  Buyer's  con- 
tention as  to  late  shipment  was  not  sustained." 

As  to  the  quality  of  the  goods,  Buyer  admitted  having  taken  de- 
livery of  the  nuts  and  removed  them  from  the  dock  where  they  were 
to  have  been  inspected,  and  he  further  admitted  that  the  failure  to 
inspect  at  the  proper  time  and  place  was  due  to  the  negligence  of  Buyer's 
agent.  The  contract  specifically  provided  for  an  inspection  and  ac- 
ceptance upon  arrival,  and  Buyer's  action  in  taking  delivery  without 
protest  was  in  itself  an  acceptance  of  the  quality.  The  Seller  cannot 
be  held  responsible  for  the  negligence  of  the  Buyer  or  his  agent,  nor 
can  he  be  held  responsible  for  the  condition  of  the  peanuts  after  they 
have  left  the  point  of  delivery  to  Buyer.  Buyer,  having  accepted 
delivery,  waived  his  right  to  question  the  quality  thereof.  The  Buyer 
having  so  accepted  the  goods  and  having  waived  his  right  of  rejection, 
cannot  later  raise  the  question  of  quality  before  Arbitrators. 

Held,  That  shipment  was  effected  from  the  Orient  within  contract 
period,  as  evidenced  by  the  bill  of  lading,  and  Seller  was  justified  in 
rejecting  any  and  all  claims  by  Buyer  under  this  contract  and  delivery. 
(Foreign  Commerce  Association  Arbitration  No.  14,  1920.) 

June  Shipment  Does  Not  Mean  June  Tender — Fixing  Loss  on 
Resale — Under  a  contract  calling  for  eleven  tank  cars  Soya  Bean 
Oil,  June  shipment  from  the  Pacific  Coast,  Buyer  rejected  as  to  two 
tanks,  claiming  that  they  were  not  tendered  up  to  the  end  of  June, 
although  definite  instructions  had  been  placed  by  his  agent  and  repre- 
sentative with  Seller  to  ship  one  car  to  "X"  at  Cleveland,  Ohio,  and  one 
car  to  "Y"  at  Relee,  Virginia. 

Held,  First — That  Buyer  purchased  for  June  shipment,  not  June 
tender,  and  that  Seller  fulfilled  the  terms  of  the  contract  for  June 
shipment  by  subsequently  tendering  June  shipment. 

Second — That  in  view  of  the  complicated  and  many  times  changed 
shipping  instructions  sent  by  Buyer's  representative,  Seller  at  all  times 


REPORTS  195 

acted  in  absolute  good  faith  and  in  accordance  with  the  contract 
provisions. 

Third — That  Buyer  is  not  entitled  to  reject  the  car  in  question  and 
that  the  difference  between  contract  and  resale  price  shall  be  for  the 
account  of  Buyer,  together  with  costs  of  telegrams  and  brokerage. 

Fourth — That  there  being  sufficient  doubt  in  the  minds  of  Arbi- 
trators as  to  whether  the  difference  in  freight  on  tank  shipped  to  "X" 
at  Cleveland,  Ohio,  was  not  due  to  Seller's  failure  to  follow  shipping 
instructions,  the  freight  thereon  shall  be  charged  to  Seller,  and  no 
allowance  shall  be  made  for  any  interest  on  deferred  payments. 
(Foreign  Commerce  Association  Arbitration  No.  23,  1920.) 

Wrongful  Dating  of  Bill  of  Lading — Rejection  Permissible — 
Adverse  Winds  Not  Contingency  Beyond  Seller's  Control,  Being 
Usual  to  Sailing  Vessels — A  sold  to  B  the  full  cargo  of  Copra,  F.  0.  B. 

cars  port  of  entry,  ex  S.  V.  "Narwhal"  for  shipment  October-November- 
December  from  Savu  Savu.  The  conditions  of  the  contract  were 
identical  with  those  of  the  Uniform  Copra  Contract  of  the  Foreign 
Commerce  Association  of  the  Pacific  Coast.  Upon  arrival  of  the  vessel 
at  San  Francisco,  Buyer  rejected,  claiming  that  shipment  was  not 
effected  within  contract  period,  in  that,  although  the  bill  of  lading  was 
dated  December  31,  1920,  loading  of  the  cargo  did  not  begin  until 
January  5,  1921,  and  was  not  completed  until  January  15th.  Buyer 
contended  that  inasmuch  as  the  bill  of  lading  specified  that  589  tons 
and  12  cwt.  were  "loaded  in  and  on  board"  the  vessel  on  December  31st 
while  actual  loading  did  not  commence,  as  revealed  by  the  vessel's 
log,  until  January  5th,  manifestly  the  bill  of  lading  was  in  error.  Seller 
contended  that  the  vessel  had  arrived  at  Savu  Savu  on  the  evening 
of  December  28th  and  had  gone  aground;  that  she  was  hauled  off  the 
following  day  and  docked  alongside  where  the  cargo  was  stored;  that 
the  cargo  was  tendered  to  the  vessel  on  December  31st.  Seller  main- 
tained that  Rule  9  of  the  Foreign  Commerce  Association  of  the  Pacific 
Coast  applied,  which  Rule  read  as  follows: 

"  The  date  of  bill  of  lading  or  shipping  receipt  shall  be  final  as  to  date  of 
shipment." 

Seller  further  set  up  the  operation  of  Rule  201,  reading  as  follows: 
"Seller  shall  not  be  responsible  to  Buyer  for  delayed  or  non-shipment 
directly  or  indirectly  resulting  from  a  contingency  beyond  his  control, 
such  as  embargo,  act  of  government,  strike,  fire,  flood,  drought,  hurricane, 
war,  insurrection,  riot,  explosion,  epidemic,  pestilence,  earthquake,  acci- 
dent, perils  of  the  sea,  tidal  wave,  or  any  other  contingency  beyond  Seller's 
control  not  herein  enumerated.     If,  due  to  any  of  the  causes  provided 


196  COMMERCIAL   ARBITRATION 

herein,  shipment  by  steamer  is  not  made  within  two  months  or  by  sailing 
vessel  within  three  months  after  the  contractual  time  for  shipment,  contract 
shall  terminate  with  respect  to  any  goods  not  then  shipped" 

Seller  claimed  that  the  vessel  was  prevented  by  "  contingencies 
beyond  Seller's  control"  from  leaving  Melbourne  Harbor,  where  she 
had  been  wind-bound  from  November  15th  to  26th,  the  pilot  and  tug 
refusing  to  take  her  outside  on  account  of  adverse  weather  conditions. 
Seller  set  forth  that  this  was  a  contingency  beyond  his  control  and  such 
being  the  case  he  was  entitled  to  compensating  time  in  which  to  make 
shipment,  relying  especially  upon  this  provision  of  Rule  201,  namely: 
11  If  due  to  any  of  the  causes  provided  herein,  shipment  by  steamer  is  not 
made  within  two  months  or  by  sailing  vessel  within  three  months  after  the 
contractual  time  for  shipment,  contract  shall  terminate  with  respect  to  any 
goods  not  then  shipped." 

Upon  the  question  of  the  dating  of  the  bill  of  lading  the  captain  of 
the  vessel  gave  testimony  before  the  arbitrators,  stating  that  the  cargo 
had  been  tendered  to  him  verbally  on  December  31st;  that  his  vessel 
was  alongside  and  the  cargo  ready  for  shipment,  that  it  was  necessary 
to  discharge  ballast  before  loading,  but  he  also  declared  that  he  did  not 
consider  the  vessel  responsible  for  the  cargo  until  after  he  had  receipted 
for  same,  which  he  did  after  each  day's  loading.  Upon  the  question  of 
the  vessel  being  wind-bound,  the  log  was  produced,  showing  that 
she  was  held  up  at  Kunie  Klift  for  ten  days  on  account  of  storm  con- 
ditions which  prevented  her  departure. 

Held,  From  the  evidence  submitted  it  appears  that  in  a  contract 
dated  October  12,  1920,  Seller  sold  to  X  a  full  cargo  S.  V.  "Narwhal" 
in  bulk,  estimated  about  six  hundred  tons  of  "Fiji  Sun-dried  Copra, 
shipment  to  be  per  S.  V.  "Narwhal"  from  Savu  Savu  during  October- 
November-December,  1920.  Price  seven  and  one-half  cents  (73^c) 
per  pound,  net  landed  weights  F.  O.  B.  cars  San  Francisco.  The 
contract  was  made  under  the  Uniform  Contract  adopted  February 
14,  1920,  by  Foreign  Commerce  Association  of  the  Pacific  Coast, 
First  Edition,  relating  to  sales  such  as  the  one  in  question.  Subse- 
quently B  assumed  this  contract  and  appears  in  this  case  as  Buyer. 

The  "Narwhal"  arrived  at  San  Francisco  April  14,  1921,  and 
Buyer  rejected  the  cargo,  claiming  that  the  shipment  was  not  made  in 
contract  period,  as  an  examination  of  the  vessel's  log  by  a  Marine 
Surveyor  showed  the  vessel  arrived  at  Savu  Savu  December  29th  and 
did  not  complete  discharging  ballast  until  January  3,  1921,  and  began 
loading  copra  on  January  5th  and  completed  loading  on  January  15th, 
sailing  January  18,   1921. 


REPORTS  197 

The  bill  of  lading  submitted  is  dated  December  31,  1920,  and 
specifies  that  589  tons  12  cwt.  were  shipped  in  good  order  and  con- 
dition in  and  upon  the  vessel  named.  Buyer  claims  that  the  shipment 
was  a  January,  1921,  shipment  and  not  a  December,  1920,  shipment  and 
that  date  of  bill  of  lading  should  be  corrected  to  bear  date  of  January 
15,  1921,  and  that  right  of  Buyer  to  reject  the  shipment  be  sustained. 

Seller  claims  that,  under  Rule  9  of  the  Foreign  Commerce  Asso- 
ciation, to  whose  aforesaid  Rules  the  contract  is  subject,  the  date  of 
the  bill  of  lading  shall  be  final  as  to  date  of  shipment  and  that  Bill  of 
Lading  in  this  case  being  dated  December  31,  1920,  the  shipment  had 
been  made  as  per  contract. 

Seller,  therefore,  claims  that  Buyer  should  take  delivery  of  the 
said  cargo  and  pay  for  same  and  also  pay  demurrage  of  vessel  and  any 
other  charges  accrued  and  interest  on  the  deferred  payment. 

We  have  examined  the  copy  of  the  vessel's  log,  and  the  original  log 
was  also  produced,  and  we  find  that  loading  of  the  cargo  appears  therein 
as  having  begun  on  January  5,  1921.  That  the  vessel  arrived  at  the 
Savu  Savu  dock  on  December  29th  and  was  engaged,  while  working,  in 
discharging  ballast  until  and  including  January  3rd.  That  loading 
cargo  was  completed  January  15th. 

We  requested  the  captain  of  the  vessel  to  appear  and  testify  re- 
garding the  signing  of  the  bill  of  lading  and  when  the  exact  quantity 
of  copra  specified  therein  was  inserted  in  bill  of  lading  as  it  did  not 
appear  that  the  exact  quantity  the  vessel  could  load  could  be  known 
by  him  on  December  31st. 

From  the  captain's  testimony  it  is  in  evidence  that  he  did  not  sign 
the  bill  of  lading  until  January  15,  1921,  when  loading  was  completed 
and  that  the  quantity  loaded  was  inserted  at  that  time  when  he  signed 
it.  Furthermore  that  he  did  not  notice  when  he  signed  the  bill  of 
lading  that  it  bore  date  of  December  31,  1920,  and  that  he  did  not 
begin  loading  copra  until  either  January  4th  or  5th. 

As  regards  Rule  9,  referred  to  by  Seller,  we  feel  that  the  date  of 
bill  of  lading  should  be  evidence  of  shipment  unless  proof  to  the  con- 
trary is  furnished  and  such  proof  has  been  furnished  in  this  case. 

The  date  of  the  bill  of  lading  is  supposed  to  be  the  date  it  is  signed 
and  executed  in  order  to  make  it  a  complete  document. 

In  this  case  it  is  clearly  shown  from  the  captain's  testimony  that 
the  bill  of  lading  was  not  signed  until  January  15,  1921,  which  was 
the  earliest  date  when  the  amount  of  copra  shipped  could  be  known 
and  inserted  in  the  bill  of  lading  as  the    shipment   was  to  be  a  full 


198  COMMERCIAL   ARBITRATION 

cargo  and  the  Seller  in  this  case  was  also  the  Charterer  of  the  vessel 
and  this  bill  of  lading  calls  for  a  specific  amount  of  cargo  being  shipped 
and  does  not  contain  the  words  "more  or  less." 

Therefore,  the  bill  of  lading  was  erroneously  dated  December  31, 
1920,  and  the  correct  date  that  should  appear  on  it  would  be  January 
15,  1921,  the  date  it  was  signed,  and  in  view  of  the  evidence  in  this 
case  we  find  that  the  cargo  was  not  shipped  in  accordance  with  terms 
of  contract  which  called  for  October-November-December  shipment. 

As  regards  Rule  2,  "Casualty"  of  the  Rules  of  Foreign  Commerce 
Association,  referred  to  in  Seller's  statement  of  facts,  relating  to  delay 
in  shipment  due  to  casualty,  we  do  not  consider  in  case  of  a  sailing 
vessel,  that  adverse  winds,  to  the  extent  shown  to  have  occurred  in 
this  instance,  which  are  a  well  known  common  occurrence  and  therefore 
to  be  expected  on  any  such  voyage,  can  be  considered  as  a  "Casualty" 
coming  within  the  meaning  of  said  Rule  2  that  relieves  Seller  from 
liability  for  late  shipment  on  that  account. 

We  decide  that  the  shipment  in  question  was  not  made  within  the 
time  limits  of  the  contract  and  that  Buyer  is  not  required  to  take  de- 
livery of  the  cargo  and  shall  not  be  held  liable  for  any  demurrage  of 
vessel  or  other  charges  that  may  have  accrued  to  vessel.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1921). 

Affirmed  on  Appeal — Seller  appealed,  claiming  error  on  the  part 
of  the  arbitrators,  particularly  that  Rule  2  had  been  applied  instead 
of  Rule  201,  which  governs  Copra,  and  also  that  the  arbitrators  had 
not  given  due  consideration  to  the  fact  that  the  vessel  had  been  wind- 
bound  at  Melbourne,  a  contingency  provided  for  in  the  rules  govern- 
ing the  transaction. 

Held,  That  the  findings  and  award  of  the  Arbitration  Committee 
are  sustained  in  their  entirety  and  no  error  was  committed.  (San 
Francisco  Chamber  of  Commerce  Arbitration  Appeal,  1921). 

Note — Obviously  there  was  error  on  the  part  of  arbitrators  in 
applying  Rule  2  to  a  Copra  contract.  The  rule  referred  to  should  be 
Rule  201.  However,  the  reasoning  of  the  award  indicates  that  the 
arbitrators  would  have  made  the  same  decision  had  the  proper  rule 
been  cited.   The  Appeals  Committee  remained  silent  on  this  point. — Ed. 

Legal  Holidays  Affecting  Time  of  Shipment — Meaning  of 
Term  Prompt — A  sold  B  a  quantity  of  Beans  for  prompt  shipment 
F.  O.  B.  common  California  shipping  point.  Buyer  gave  shipping  in- 
structions by  wire  on  October  11th,  which  were  not  received  by  Seller, 


REPORTS  199 

according  to  the  records  of  the  telegraph  company,  until  5:51  p.m.  of 
that  day.  October  12th  was  a  legal  holiday  and  October  13th  was 
Sunday.   Shipment  was  made  October  24th. 

Held,  That  the  10-day  period  for  prompt  shipment  did  not  begin 
to  run  until  October  14th,  and  shipment  having  been  made  October 
24th,  prompt  shipment  had  been  complied  with.  (California  Bean 
Dealers  Association  Arbitration  No.  16,  1918). 

Strike  Does  Not  Excuse  Seller  Unless  Mill  Is  Specified  or 
Strike  General — Extension  of  Time  Under  Misapprehension  or 
Misrepresentation — Differentiation  Between  Strike  and  Labor 
Trouble — Buyer  Must  Notify  Seller  Before  Purchasing  for  His 
Account,  Else  Damages  for  Late  Shipment  Will  Not  Lie — A 
( Calcutta  merchant  sold  to  a  San  Francisco  importer  a  quantity  of 
bales  of  Calcutta  Grain  Bags  for  shipment  in  March,  April  and  May, 
1912.  Failing  to  effect  shipment,  Seller  claimed  exemption  from  re- 
sponsibility (1)  because  there  were  strikes  in  Calcutta  mills,  (2)  Buyer 
was  bound  to  notify  Seller  before  purchasing  bags  for  his  account,  and 
(3)  that  drafts  were  accepted  and  paid  by  Buyer  who  took  delivery  of 
the  bags  for  his  own  account  and  did  not  make  claim  for  late  shipment 
until  October  1,  1912.  Buyer  claimed  (1)  that  upon  notification  on 
April  19,  1912,  that  there  would  be  a  delay  by  reason  of  strikes  in 
shipment  of  1,000  bales  contracted  for  April  shipment  he  consented  to 
an  extension  of  time  for  April  shipment  solely  on  the  representation 
that  strikes  had  interfered ;  (2)  that  he  did  not  discover  until  September 
that  the  representation  made  by  Seller  was  incorrect,  inasmuch  as  there 
was  no  general  strike  in  Calcutta. 

The  evidence  showed  that  there  were  approximately  41  mills  which 
could  make  grain  bags;  that  the  Seller  had  purchased  from  15  mills  to 
fulfill  his  contracts  with  this  Buyer,  and  of  these  mills  8  were  on  strike 
for  certain  periods;  that  the  capacity  of  these  15  mills  was  about  24,200,- 
000  bags,  and  the  capacity  of  the  8  in  which  there  were  strikes  was 
17,000,000  bags,  or  about  70  per  cent,  and  the  capacity  of  the  mills 
in  which  there  was  no  strike  was  7,200,000,  or  30  per  cent. 

In  discussing  the  important  issues  raised  in  this  arbitration,  the 
arbitrators  said : 

"Inasmuch  as  Buyer's  contract  does  not  specify  from  which  mills 
the  bags  were  to  be  supplied,  it  was  optional  with  Seller  as  far  as 
Buyer  was  concerned,  to  buy  from  any  or  all  of  the  mills  in  Calcutta. 
Buyer  had  no  say  in  the  matter,  was   not  consulted   and  never  had 


200  COMMERCIAL  ARBITRATION 

notice  which  mills  were  to  supply  the  contracts.  That  being  so,  it  was 
only  a  general  strike  that  could  affect  the  contracts  of  Buyer,  and 
there  is  ample  evidence  to  show  that  there  was  no  general  strike. 

"Buyer  claims  that  he  was  entitled  to  notice  of  strikes  within 
7  days  according  to  the  contract,  but  Seller  did  not  give  any  such  notice 
until  the  19th  of  April,Jwho  claimed  that  notice  need  not  be  given  until 
practically  the  end  of  a  strike  as  he  could  not  tell  whether  the  goods 
would  be  delayed  or  not.  In  our  opinion,  that  has  no  bearing  on  the 
matter  at  all,  inasmuch  asjthe  Committee  finds,  as  above  stated,  that 
there  was  no  general  strike  and  that  therefore  no  notice  could  be  given 
because  a  notice  from  one  or  several  mills  would  not  be  sufficient  to 
exempt  Sel'er  from  shipments  from  Calcutta  under  the  terms  of  the 
contract. 

"The  Committee  has  given  the  question  of  strikes  very  serious 
consideration  and  from  all  the  evidence  which  has  been  put  before  us, 
while  we  are  satisfied  that  there  were  labor  troubles  during  the  summer 
season  of  1912  and  only  a  few  of  the  mills  issued  what  is  known  as  a 
strike  notice  to  cover  this,  the  Committee  rules  that  a  shortage  of 
labor  was  not  covered  under  the  contract  which  existed  between  Buyer 
and  Seller  as  a  shortage  of  labor  is  a  prevalent  thing  with  the  Calcutta 
jute  mills  during  the  hot  season,  which  representative  of  the  Seller 
admits.  The  Committee  desires  to  distinguish  between  labor  troubles, 
which  might  and  do  include  shortage  of  workmen,  and  a  general  strike. 
The  latter  only  could  affect  the  contract  as  worded  between  the  two 
parties. 

"We  find  that  Buyer  purchased  707  bales  at  a  cost  of  $77,632.50 
for  delivery  against  contracts  he  had  made  for  the  July  delivery  with 
the  expectation  of  receiving  the  goods  which  were  sold  him  by  Seller, 
and  the  total  price  for  which  he  had  contracted  to  sell  these  bags  was 
$57,730.50.  The  Committee  confirmed,  by  inspection  of  the  contracts 
and  books  of  Buyer,  the  correctness  of  his  contracts  to  sell  these  707 
bales  and  the  prices  he  was  to  receive  for  same,  and  the  correctness 
of  the  prices  paid  by  Buyer  for  bags  purchased  to  fill  contracts  on 
account  of  late  shipments  of  Seller's  shipments.  The  difference  between 
the  forced  purchase  price  to  fill  said  contracts  and  .that  which  he 
received  from  the  buyers  for  said  contracts  was  $19,902,  which 
amount  is  hereby  awarded  to  Buyer  to  be  paid  by  Seller  as  the  total 
damages  sustained  by  Buyer  on  account  of  late  shipments  by  Seller. 

"As  regards  the  claim  of  Buyer  for  the  alleged  profit  which  he 
expected  to  make  on  200  bags  of  grain  bags  bought  on  February  3rd 
and    March    29,    1912,  which  he  stated  he  should  have  been  able 


REPORTS  201 

to  sell  at  11H  cents,  but  which  he  was  obliged  to  deliver  against 
contracts  already  entered  into  on  account  of  late  shipments  of  Seller, 
the  Committee  is  of  the  opinion  that  this  claim  is  not  justified  as  the 
profit  claimed  was  prospective,  and  there  is  no  evidence  to  show  that 
Buyer  suffered  actual  loss  on  the  price  at  which  these  bags  were  sold. 

"Buyer's  claim  for  the  delay  on  all  other  shipments  is  disputed  by 
Seller  on  the  ground  that  delivery  of  same  was  taken  by  Buyer's  ac- 
ceptance of  the  drafts;  that  no  protest  was  lodged  with  Seller  or  his 
representative;  that  he  should  have  received  notice  from  Buyer  that 
the  bags  would  be  held  for  account  of  Seller.  These  goods  were  taken 
delivery  of  by  Buyer  and  held  by  him  for  months  before  any  notice 
whatever  was  given  to  Seller  or  his  representative,  although  he 
well  knew  that  there  was  a  delay  in  the  shipment.  The  Committee 
finds  that  Buyer  failed  to  notify  Seller  and  therefore  that  he  had  no 
claim  against  Seller  on  this  account. 

"Aside  from  the  short  shipments  occasioned  by  the  so-called  strikes, 
both  sides  brought  up  many  points  in  reference  to  the  prices  prevailing 
just  prior  and  subsequent  to  the  arrival  of  the  delayed  shipments, 
claiming  that  this  had  a  bearing  on  the  matter.  While  the  Committee 
has  carefully  considered  this  and  other  points  raised  by  both  sides,  it  is 
not  necessary  to  dwell  thereon  herein  as  we  consider  they  have  no 
bearing  on  the  matter  in  controversy,  the  same  having  been  decided 
on  the  point  of  the  goods  having  been  accepted  by  Buyer  without 
protest.      (San  Francisco  Chamber  of  Commerce  Arbitration,  1913.) 

Affirmed  on  Appeal,  but  Amount  of  Damages  Reduced — This 
matter  went  to  appeal,  the  arbitrators  on  appeal  saying: 

"First.  Your  Committee  agrees  with  the  Arbitration  Committee 
that  "strikes"  within  the  meaning  of  the  contracts,  did  not  prevent  the 
fulfillment  thereof,  and  agrees  with  said  Committee  in  making  a  dis- 
tinction between  labor  troubles  and  strikes. 

"Second.  Buyer  having  been  advised  by  cable  on  April  19th  by 
Seller  that  there  would  be  delay  in  the  shipment  of  1,000  bales,  April, 
owing  to  strikes,  found  it  necessary  to  cover  (at  that  time  for  his 
own  account  on  the  supposition  that  a  more  or  less  general  strike  in  the 
Calcutta  mills  existed)  sales  to  the  amount  of  907  bales  which  he 
had  made  against  this  expected  April  shipment  of  1,000  bales. 

"Third.  Buyer  then  purchased  in  this  market  707  bales  of  Standard 
Bags  at  a  cost  of  $77,632.50.  Buyer  had  in  store  200  bales  which  he 
also  delivered  to  his  customers  to  fill  the  sales  of  907  bales  which  he 
had  made.    We  base  the  value  of  these  200  bales  the  same  as  the  707 


202  COMMERCIAL   ARBITRATION 

bales;  hence  if  707  bales  cost  $77,632.50,  907  bales  would  cost  $99,593.50. 
Buyer  had  sold  these  907  bales  for  delivery  in  July,  for  the  sum  of 
$74,070.50,  which,  deducted  from  the  forced  purchase  price  of  $99,593.50, 
leaves  a  net  cash  loss  of  $25,523,  which  sum  we  now  award  to  Buyer. 

" Fourth.  Buyer  is  entitled  also  to  the  profit  he  would  have 
made  by  contracts  entered  into  if  Seller  had  shipped  the  907  bales 
within  contract  time,  which  profit  figures  $11,759.60.  This  sum  we  also 
award  to  Buyer. 

"Fifth.  Having  thus  placed  Buyer  in  the  same  position,  so  far  as 
dollars  and  cents  are  concerned,  as  he  would  have  been  in  if  his 
907  bales,  April  shipment,  had  arrived  on  time,  we  award  to  Seller  the 
difference  between  the  average  cost  price  of  the  bags  and  the  estimated 
value  at  a  reasonable  time  after  their  arrival,  which  difference  we  place 
at  $23,250.00  and  this  sum  we  award  to  Seller. 

Sixth.     Summing  up  the  case: 

Seller  is  to  pay  Buyer  as  per  paragraph  3 $25,523.00 

Seller  is  also  to  pay  Buyer  as  per  paragraph  4 11,759.60 

Total $37,282.60 

Whereas 
Buyer  is  to  pay  Seller  as  per  paragraph  5 $23,250.00 

Leaving  in  favor  of  Buyer $14,032.60 

and  interest  on  this  sum  at  6  per  cent  from  August  1,  1912,  to  the 
date  when  this  claim  is  settled,  which  interest  is  also  awarded  to  Buyer. 
(San  Francisco  Chamber  of  Commerce  Arbitration,  1913). 

Dissenting  Opinion — The  following  dissenting  opinion  was  filed: 

"I  concur  with  the  first,  second  and  third  items  in  the  foregoing 
decision. 

"I  also  concur  in  the  decision,  that  Buyer  has  no  claim  against 
Seller  on  account  of  the  delayed  shipments  of  grain  bags  involved  in 
this  dispute  other  than  the  aforesaid  907  bales. 

"I  dissent  from  the  foregoing  decision  as  regards  the  fourth,  fifth 
and  sixth  items,  as  I  believe  that  Buyer  is  entitled  to  the  full  amount 
of  his  net  cash  loss  on  the  907  bales  repurchased  in  the  local  market 
as  his  total  damages  in  this  case,  which  amount  is  $25,523." 

Damages  Allowed  for  Late  Shipment  When  Buyer  Purchased 
in  Other  Market  for  Seller's  Account,  After  Notice  —  Strike 
Clause  Fully  Interpreted — A  San  Francisco  Buyer  purchased  from 
a  Calcutta  merchant,  4,750  bales  of  Standard  Calcutta  Grain  Bags, 


REPORTS  203 

1,000  bags  to  the  bale,  the  contracts  being  made  in  November,  1911, 
and  in  January,  February  and  March,  1912.  Shipments  in  dispute 
were  to  be  made  as  follows:  700  bales  in  March,  1912;  1,700  bales  in 
April,  1912;  1,200  bales  in  May,  1912,  making  a  total  of  3,600  bales 
to  be  shipped  in  the  months  named.  Each  contract  specified  the  month 
of  shipment  from  Calcutta,  C.  I.  F.  San  Francisco. 

The  following  clause  was  in  the  contracts: 

"Delays  caused  by  damage  or  accidents  to  the  mill  or 
factories  or  strikes  or  pestilence  among  the  workmen  en- 
gaged therein  on  goods  for  the  above  contract  to  be  excepted. 
In  the  event  of  any  portion  of  this  contract  not  being  shipped 
in  terms  thereof,  the  right  of  Buyers  to  cancel,  reject  or  claim, 
is  to  the  unshipped  portion  only.  Buyers  to  accept  any  portion 
shipped  in  accordance  with  contract.  Sellers  must  notify 
Buyers  within  seven  (7)  days  of  such  delay." 

The  contracts  did  not  specify  any  particular  mill  or  mills  from 
which  the  Seller  was  to  procure  the  bags. 

Under  date  April  19,   1912,  Seller  cabled  Buyer  that  the  April 
shipment  would  be  late  owing  to  strike,  and  advised  later  that  he 
expected  to  ship  by  May  20th.   Buyer  then  sent  the  following  cable: 
"Ship  when  ready.     Please  ship  our  goods  as  early  as 
possible  each  month.  The  result  is  most  disastrous  if  you  have 
not  shipped  in  good  time.    We  have  sold  against  April  ship- 
ment.    We  cannot  provide  against  strike  when  selling.' ' 
Seller  replied  to  this  as  follows: 

"Please  refer  to  contracts  terms.  We  will  not  be  responsible. 
We  will  do  our  best." 
The  immediate  reply  by  Buyer  was  as  follows: 

"We  extend  the  time  of  shipment.    You  may  ship  when 
ready.  Try  hard  to  finish  S.  S.  "Nainsang"  17th  day  of  May." 
Buyer  claimed  that  his  extension  of  time  was  only  until  May  20th 
on  the  shipment  to  have  been  made  in  April,  but  the  arbitrators  said 
in  this  regard:   "By  no  stretch  of  the  imagination  can  we  conceive  that 
the  time  was  extended  only  to  May  20th." 

Buyer  contracted  to  sell  bags  for  July  delivery  against  the  March 
and  April  shipments.  By  the  end  of  April  there  were  1,160  bales  of 
April  shipment  unshipped  and  by  the  end  of  May  the  late  shipments 
for  April  and  May  shipments  amounted  to  1,524  bales.  Having  ex- 
tended the  time  on  only  500  bales,  Buyer  gave  notice  to  Seller's  San 
Francisco    agent  that  Seller  would  be  held  responsible  for  damages 


204  COMMERCIAL   ARBITRATION 

for  late  shipments.  Seller  again  disclaimed  responsibility  for  the  delay. 
Buyer  purchased  "for  the  account  of  whom  it  might  concern"  in  the 
local  market  1,449  bales  to  protect  his  sales  contracts  for  an  equal 
quantity  to  be  delivered  in  July,  the  cost  being  $155,055.01,  an  excess 
of  $53,483.11  over  the  cost  of  the  same  quantity  of  bags  contracted 
for  from  the  Calcutta  Seller.  To  the  excess  amount  Buyer  added 
$4,011.25  in  interest,  and  filed  a  claim  with  the  arbitrators  for  the 
total  of  $57,494.66. 

Seller  averred  that  there  were  strikes  in  Calcutta  in  April,  1912, 
and  that  these  strikes  prevented  him  shipping  the  500  bales  in  April 
on  which  an  extension  of  time  had  been  granted.  He  further  claimed 
that  Buyer  took  delivery  of  all  the  shipments  for  Buyer's  account  and 
sold  the  same. 

There  are  41  mills  in  Calcutta  (1912)  of  which  about  25  make  wheat 
bags  and  have  a  capacity  of  43,400,000  bags  per  year,  and  the  other 
mills  are  equipped  with  machinery  to  make  such  bags,  so  it  is  possible 
for  them  to  do  so  in  case  of  emergency  or  if  the  inducements  offered 
were  sufficient.  Of  the  25  mills  the  evidence  showed  that  there  were 
strikes  in  the  following  four  mills: 

Hastings,  on  strike  from  April  12  to  April  27. 
Haoghly,  on  strike  from  March  13  to  April  9. 
Anglo-India,  on  strike  from  March  25  to  April  1. 
Belvedere,  on  strike  from  April  9  to  April  29. 

Three  other  mills,  namely  Nailati,  National  and  Clive,  also  had 
strikes,  but  the  duration  thereof  was  not  in  evidence.  The  evidence 
showed  that  the  employes  of  only  seven  mills  out  of  25  were  on  strike, 
and  there  was  nothing  to  indicate  that  the  Seller  had  used  his  best 
endeavors  to  procure  about  500  bales  for  April  shipment  from  the 
mills  not  on  strike.  On  the  question  of  whether  there  was  a  strike  of  a 
general  nature  and  the  Seller  thereby  relieved  under  the  clause  quoted 
in  the  foregoing  it  was 

Held,  That  there  was  no  general  strike  among  the  Calcutta  mills 
during  the  period  covered  by  the  contracts,  and  that  as  the  contracts 
did  not  specify  any  particular  mills  from  which  the  bags  were  to  be 
procured  the  Seller  was  bound  to  procure  these  bags  from  any  source 
and  to  ship  on  time,  even  though  he  might  have  to  pay  a  higher  price 
therefor  than  he  expected  to  pay  when  he  contracted  to  sell  them  to 
Buyer,  unless  he  had  shown  his  inability  to  secure  bags  from  any 
source.  Further,  that  the  extension  of  time  given  by  Buyer  to  Seller 
was  made  under  a  misapprehension  and  incorrect  statement  of  strike 


REPORTS  205 

conditions  in  Calcutta  during  April,  1912,  and  the  same  was  of  no 
force  and  effect  and  did  not  relieve  Seller  from  his  obligation  to  ship 
said  500  bales  in  April  and  that  Buyer  is  entitled  to  damages  for  the 
delay  in  shipment. 

The  arbitrators  allowed  the  Buyer  the  actual  cash  loss  sustained 
through  the  purchase  of  the  500  bales  in  the  local  market,  which  loss 
was  $16,400;  Seller  was  directed  to  pay  Buyer  the  actual  loss  on  949 
bales  repurchased,  or  $31,127.20.  Buyer  was  directed  to  pay  Seller 
the  remainder  of  the  profit  on  949  bales  late  shipped,  which  left 
$21,032.55  as  damages  to  be  paid  by  Seller  to  Buyer.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1913). 

Affirmed   on   Appeal,    but   Amount  of  Damages  Reduced — 

On  Appeal,  the  arbitrators  affirmed  the  award  of  the  original  arbi- 
trators that  no  general  strike  existed  at  Calcutta  in  April,  1912,  but 
allowed  the  Buyer  $17,495.84  as  total  damages.  (San  Francisco  Cham- 
ber of  Commerce  Arbitration  on  Appeal,  1913). 

Force  Majeure  as  Affecting  Time  of  Shipment — Cargo  Shut 
Out  by  Carrier  Shipped  on  Later  Vessel — Buyer's  Responsibility 
Under  C.  I.  F.  Contract — Bill  of  Lading  Subject  to  Mate's  Re- 
ceipt— A  sold  to  B  a  quantity  of  whole  Coconuts  for  shipment  in  bulk 
during  the  month  of  August  from  Manila  to  New  York,  under  a  C.  I.  F. 
contract,  except  as  to  a  clause  reading  as  follows:  Rottage  in  excess  of 
5  per  cent  for  account  of  Seller.  Shipment  was  made  in  two  lots  by 
separate  vessels,  as  hereafter  set  forth,  and  upon  arrival  at  New  York, 
the  goods  were  rejected,  Buyer  alleging  as  to  one  lot,  that  the  nuts 
were  virtually  all  rotten,  and  as  to  the  other  lot  that  shipment  had 
not  been  made  within  contract  time.  The  question  of  rottage  was  in- 
volved in  this  shipment  also. 

The  entire  lot  of  coconuts,  approximately  300,000,  was  tendered 
to  the  S.  S.  "Akita  Maru",  and  bill  of  lading  stamped  subject  to  pro- 
duction and  condition  of  mate's  receipt  was  issued  at  Manila  August  30, 
1920,  and  negotiated  the  same  day  by  Seller.  During  the  process  of 
loading,  a  typhoon  occurred,  three  cascos  were  sunk,  and  the  nuts 
on  three  cascos  were  more  or  less  exposed  to  the  storm  and  rains  before 
loading  aboard  the  vessel.  Subsequently  the  vessel  shut  out  a  portion 
of  the  shipment,  and  the  mate's  receipt  covering  those  shipped  had 
endorsed  thereon  all  in  bad  order.  The  remainder  of  the  cargo,  except 
that  lost  in  the  typhoon,  was  shipped  per  a  subsequent  steamer,  the 
"Cape  May,"  on  October  1,  1920. 


205  COMMERCIAL   ARBITRATION 

Upon  submission  to  arbitration,  Seller  contended  that  as  the  con- 
tract was  C.  I.  F.,  responsibility  of  Seller  terminated  upon  tender 
to  carrier  and  issuance  of  a  bill  of  lading  for  the  shipment.  Buyer  set 
up  that  the  coconuts,  having  arrived  sprouted  and  rotten,  he  was  not 
required  to  take  delivery  thereof,  and  was  entitled  to  recover  the  full 
amount  of  the  invoice  which  had  been  paid,  together  with  interest 
from  date  of  rejection  to  date  of  repayment.  And,  furthermore,  he 
stressed  the  claim  that  the  shipment  ex  the  S.  S.  "Cape  May"  was  not 
effected  in  August,  but  that  bill  of  lading  was  dated  October  1,  1920. 
In  response  to  this  contention,  Seller  claimed  that  Rule  2  of  the  Foreign 
Commerce  Association  of  the  Pacific  Coast,  (the  contract  being  the 
uniform  form  of  that  Association),  provided  for  the  contingency  which 
resulted  directly  from  the  typhoon  of  August  30th,  that  he  was  relieved 
of  responsibility  for  delayed  shipment  and  was  clearly  within  his  rights 
in  shipping  per  the  next  available  steamer. 

.  As  to  whether  the  contract  was  strictly  C.  I.  F.  the  arbitrators 
said: 

"As  to  the  contract  being  strictly  C.  I.  F.:  The  so-called 
'rottage'  provision  undoubtedly  was  intended  to  cover  the 
coconuts  at  point  of  destination.  Otherwise  it  would  have  no 
effect  whatsoever,  for  it  would  not  be  reasonable  to  assume 
that  Seller  had  a  right  to  load  a  shipment  containing  5  per  cent 
rottage.  Inasmuch  as  the  contract  specifically  provided  in  one 
of  the  typewritten  clauses  for  inspection  in  accordance  with 
the  rules  of  the  Foreign  Commerce  Association,  and  such  rules 
do  not  apply  at  the  port  of  Manila,  it  is  evident  that  the  place  of 
inspection  was  intended  by  the  parties  to  be  at  port  of  arrival.' ' 

Having  thus  determined  that  the  so-called  "rottage  clause"  of  the 
contract  applied  at  New  York,  where  the  inspection  was  to  be  made 
by  Buyer,  the  arbitrators  considered  the  condition  of  the  nuts  as 
revealed  by  the  official  sample  and  inspection  made  at  New  York 
under  the  supervision  of  an  official  inspector  of  the  New  York  Produce 
Exchange.  This  inspection  showed  the  nuts  to  be  far  in  excess  of  five 
per  cent  of  rottage,  specified  to  be  for  account  of  Buyer. 

Held,  That  as  practically  the  whole  shipment  was  in  rotten  con- 
dition or  otherwise  in  bad  order  when  tendered,  due  to  the  shipper 
having  permitted  loading  in  poor  condition,  Buyer  was  entitled  to 
reject  the  whole  shipment  and  to  reimbursement  by  Seller  of  the  entire 
price  paid  for  the  goods,  and  costs  of  whatsoever  nature  were  assessed 
to  Seller. 


REPORTS  207 

Further,  the  arbitrators  said: 

"In  view  of  the  condition  of  the  coconuts  on  arrival,  the  arbitrators 
are  of  the  opinion  that  it  is  unnecessary  to  go  into  the  feature  of  time 
of  shipment."  (Foreign  Commerce  Association  Arbitration  No.  33, 
1921). 

Award  Reversed  on  Appeal,  and  Time  of  Shipment  Fixed — 

From  this  finding  and  award,  Seller  appealed,  alleging  that  the  arbi- 
trators had  erred,  and  claimed  (1)  that  under  Rule  9  of  the  Foreign 
Commerce  Association,  August  shipment  was  effected;  (2)  that  as  the 
contract  was  on  C.  I.  F.  terms,  title  passed  to  Buyer  when  shipment 
was  effected,  and  the  nuts  were  at  Buyer's  risk;  (3)  that  damage  was 
caused  by  the  typhoon  after  shipment  was  made  and  title  had  passed, 
and  the  damage  caused  by  the  act  of  the  captain,  after  receipt  of  the 
nuts  and  issuance  of  bill  of  lading,  in  shutting  out  the  nuts,  was  for  the 
account  of  Buyer,  since  title  had  passed  to  him.  Seller  alleged  error  on 
the  part  of  arbitrators  in  assessing  charges  accruing  at  New  York 
by  reason  of  Buyer's  refusal  to  take  delivery  of  the  shipment  ex  S.  S. 
"Cape  May."  In  any  event,  it  was  claimed  Buyer  had  expressly  as- 
sumed in  the  contract  the  risk  of  5  per  cent  of  rottage,  which  had  been 
disallowed  by  the  arbitrators.  Objection  was  also  made  because  the 
arbitrators  failed  to  decide  the  issue  as  to  time  of  shipment,  and  the 
operation  of  contingencies  beyond  Seller's  control,  namely,  the  typhoon 
and  the  subsequent  shutting  out  of  a  portion  of  the  cargo  by  the  first 
carrier,  the  S.  S.  "Akita  Maru."  The  arbitrators  on  appeal  discussed 
the  entire  transaction,  and  materially  modified  the  findings  and  award 
of  the  lower  board.  Because  of  the  importance  that  attaches  to  the 
principles  involved  in  the  matter,  the  entire  findings  and  award  by  the 
arbitrators  on  appeal  are  given  herewith,  as  follows: 

"Because  the  arbitrators  below,  all  of  whom  as  well  as  the  disputants 
were  unknown  to  us  throughout  this  arbitration,  went  outside  the 
express  contract  provision  in  their  award,  without  finding  that  fraud 
had  been  perpetrated  by  either  party  to  the  contract,  which,  in  our 
opinion,  would  be  the  only  justification  therefor,  it  is  fitting,  we  believe, 
to  briefly  set  forth  the  principles  that  should  govern  arbitrators  in  the 
consideration  and  determination  of  differences.  These  principles, 
briefly  stated  are: 

"(1).  That  upon  which  the  minds  of  the  parties  to  a  contract  in 
writing  have  met  is  to  be  arrived  at,  if  possible,  from  the  conditions 
and  provisions  of  the  contract,  assuming  that  the  contract  is  not  in 
any  way  in  violation  of  the  laws  of  the  country. 


208  COMMERCIAL   ARBITRATION 

"(2).  All  the  conditions  and  provisions  of  a  contract  are  to  be 
given  full  force  and  effect. 

"(3).  The  substantial  legal  rights  of  the  parties  are  to  be  ascer- 
tained and  recognized,  but  where  the  arbitrators  are  in  doubt  as  to 
what  was  intended  by  the  parties,  or  where  a  purely  technical  con- 
struction of  the  conditions  or  provisions  of  the  contract  would  defeat 
the  obvious  purpose  of  the  parties  thereto,  it  is  the  duty  of  the  arbi- 
trators to  determine  such  matters  equitably,  having  regard  for  all  the 
circumstances  of  the  case. 

"All  the  members  of  the  Committee  on  Appeal  have  perused  and 
considered  the  facts  set  forth  in  the  award  of  the  committee  below, 
and  in  all  the  documents  in  the  premises,  which  include  all  the  papers 
and  statements  in  writing  that  were  placed  before  the  lower  committee, 
and  have  concluded  that  the  committee  below  erred  in  its  findings, 
except  as  regards  the  point  at  which  inspection  was  to  be  had  and 
percentage  of  'rottage'  determined;  and  in  all  other  matters  covered 
by  the  award  of  the  lower  committee  they  find  as  follows : 

"First.  That  it  appears  from  all  the  evidence  in  the  premises 
that  Seller  and  Buyer  acted  in  the  utmost  good  faith;  and,  in  conse- 
quence, the  contract  between  the  parties,  in  considering  the  matters 
in  difference,  has  not  been  voided  in  any  way,  but  the  provisions  thereof 
are  to  be  given  full  force  and  effect. 

"Second.  That  Seller  by  obtaining  bill  of  lading  dated  August  30, 
1920,  for  317,000  coconuts — it  appearing  that  said  bill  of  lading  was 
obtained  in  every  particular  in  the  utmost  good  faith — made  August 
shipment  as  provided  in  the  contract.  It  is  fully  established  that  the 
practice  of  rubber  stamping  bills  of  lading  in  Manila  "Subject  to  Pro- 
duction and  Condition  of  Mate's  Receipt,"  as  the  bill  of  lading  in  question 
was  stamped,  or  words  to  the  same  effect,  was  and  is  customary,  and 
that  steamship  companies  were  and  are  in  the  habit  of  issuing  bills  of 
lading  to  shippers  before  mate's  receipts  have  been  given.  However, 
if  it  be  argued  that  in  consequence  of  the  clause  stamped  on  the  bill 
of  lading  that  August  shipment  was  only  made  of  the  quantity  for 
which  mate's  receipts  were  finally  obtained  for  shipment  on  the  "Akita 
Maru,"  namely — 126,670,  then  we  hold  that,  as  the  failure  of  the 
"Akita  Maru"  to  take  the  entire  317,000,  according  to  the  Captain's 
statement,  which  is  not  denied,  was  due  to  the  damaged  condition  of 
the  nuts — wet  condition  occasioned  by  the  typhoon  that  occurred  on 
August  31st  and  which  wrecked  two  of  the  lighters  and  stranded  another 
on  which  the  coconuts  were  for  which  aforesaid  bill  of  lading  had  been 
given — the  typhoon  was  the  immediate  and  direct  cause  of  the  delayed 


REPORTS  209 

shipment  of  the  coconuts,  which  finally  went  forward  on  the  S.  S. 
"Cape  May";  and,  as  the  'Casualty  Clause'  relieves  the  Seller  from 
late  shipment  when  so  occasioned,  the  Seller  actually  complied  with  the 
conditions  of  the  contract  as  to  time  of  shipment.  Regarding  the 
action  of  Seller  in  allowing  140,800  nuts,  which  might  have  been  dam- 
aged during  the  typhoon,  to  go  forward  per  S.  S.  "Cape  May",  we  cannot 
help  but  feel  that,  inasmuch  as  he  was  responsible  for  all  damage  at 
destination  in  excess  of  5  per  cent  of  the  total  shipment,  he  must  have 
acted  in  accordance  with  his  best  judgment.  Moreover,  the  report 
on  the  "Cape  May"  nuts  in  regard  to  condition  was  slightly  better 
than  on  the  "Akita  Maru". 

"Third.  The  contract  expressly  provides  that  rottage  in  excess  of 
5  per  cent  of  the  quantity  of  coconuts  called  for,  or  that  may  be  shipped 
in  execution  of  the  contract,  is  for  account  of  Seller.  Hence,  if  all  the 
coconuts  in  question  were  rotten  on  their  arrival  in  New  York,  the 
Buyer  having  undertaken  to  be  responsible  for  rottage  up  to  5  per  cent, 
could  not  properly  be  relieved  from  such  responsibility,  of  which  the 
Buyer  was  perfectly  aware  as  proved  by  his  letter  of  December  8th  and 
his  telegram  of  December  4th  reading  in  part :  We  shall  use  our  5  per 
cent  for  Copra.  Therefore,  in  this  connection  we  find  that  the  Buyer 
should  pay  the  Seller  for  5  per  cent  of  the  invoice  value  of  all  the 
coconuts  shipped,  the  rottage  in  same  exceeding  5  per  cent. 

"Fourth.  As  to  what  should  properly  constitute  rottage  the 
committee  called  for  expert  advice,  and  found,  that,  while  'rottage' 
might  have  a  technical  meaning,  from  an  equitable  standpoint  coconuts 
to  be  used  for  dessication  must  not  be  rancid,  spotted  or  rotten,  but 
that  small  sprouts  would  not  render  them  unfit  for  the  purpose  for 
which  they  were  imported.  It  appears  from  the  findings  of  the  Bureau 
of  Chemistry  of  the  New  York  Produce  Exchange,  and  such  findings 
are  not  contradicted,  that  out  of  the  1,000  coconuts  ex  S.  S.  'Akita 
Maru:'" 

Not  cleaned —  4 — sprouted,  not  rancid,  spotted  or  rotten, 
Not  cleaned —  6 — not  sprouted,  spotted,  rotten  or  rancid, 
Cleaned —  2 — Perfect, 


Only     12     coconuts  were  fit  for  dessication; 
and  out  of  the  1,000  ex  S.  S.  "Cape  May": 

Not  cleaned —  3 — not  sprouted,  rotten,  spotted  or  rancid, 
Not  cleaned — 22 — sprouted,  no  spots,  rots  and  not  rancid, 


Only         25     coconuts  were  fit  for  dessication; 


210  COMMERCIAL   ARBITRATION 

or  1.2  per  cent  of  the  quantity  shipped  on  the  "Akita  Maru"  (126,670) 
did  not  have  rottage  in  them,  and  2.5  per  cent  of  the  'Cape  May' 
shipment  were  free  from  rottage;  hence  Seller  should  be  paid  invoice 
price  for  1.2  per  cent  of  the  'Akita  Maru'  shipment  in  addition  to  the 
5  per  cent  of  the  shipment,  which,  because  of  rottage,  is  to  be  borne 
by  Buyer,  and  invoice  price  for  2.5  per  cent  of  the  'Cape  May'  shipment 
in  addition  to  the  5  per  cent  of  said  shipment  to  be  borne  by  Buyer 
because  of  rottage. 

" Fifth.  Shipment  having  been  made  by  the  Seller  in  contract- 
time,  Buyer  was  obligated  to  take  delivery  of  the  coconuts  shipped 
on  the  'Akita  Maru'  and  the  'Cape  May'  and  ascertain  the  percentage 
of  rottage  therein,  and  was  only  entitled  to  claim  on  Seller  on  account 
thereof  for  whatever  rottage  there  might  be  in  the  coconuts  on  in- 
spection of  same  as  provided  in  the  contract  on  arrival  of  the  coconuts 
in  New  York,  in  excess  of  5  per  cent;  and  that  all  expenses  necessarily 
incurred  in  consequence  of  Buyer's  failure  to  receive  the  coconuts  in 
execution  of  the  contract  are  properly  chargeable  to  Buyer.  We  find 
the  expenses  in  this  connection  properly  chargeable  to  Buyer  to  be 
$1,697.73  (the  arbitrators  then  enumerate  in  detail  the  various  items 
of  expenses). 

"We  find  that  each  party  shall  pay  his  own  telegraph  expenses  in 
connection  with  this  controversy,  and  that  the  Seller  shall  defray 
solely  the  hire  of  his  New  York  representative.  We  so  find  as  regards 
these  two  items  because,  while  we  do  not  question  the  propriety  of 
Seller  having  a  representative  in  New  York,  or  Seller  or  Buyer  incurring 
the  telegraphic  expense  that  was  incurred  by  them,  such  expenses 
were  not  necessarily  incurred  on  the  part  of  either  Seller  or  Buyer. 

"Sixth.  It  necessarily  follows  from  the  conclusions  we  have 
reached  herein  as  regards  shipment  that  Buyer  should  pay  contract 
price  for  the  coconuts  lost  during  the  typhoon,  and  that  Buyer  is 
entitled  to  recover  from  the  underwriters  whatever  may  be  collected 
from  them  on  account  of  the  loss  of  said  coconuts. 

"Seventh.  On  December  20,  1920,  rottage  on  the  nuts  was  deter- 
mined by  Robert  W.  Rouse  &  Co.,  of  New  York,  and  on  the  basis 
of  such  determination  Seller  is  responsible  for  93.8  per  cent  and  92.5 
per  cent  of  the  shipments  on  the  'Akita  Maru'  and  the  'Cape  May,' 
respectively.  The  arbitrators  make  the  following  findings  and  award : 

"First.  That  the  Buyer  is  entitled  to  repayment  of  93.8  per  cent 
of  the  C.  I.  F.,  selling  price  of  the  126,670  coconuts  ex  S.  S.  'Akita. 
Maru'  at  $59  per  thousand,  i.  e.  $7,010.17. 


REPORTS  211 

"Second.  That  the  Buyer  is  entitled  to  repayment  of  92.5  per  cent 
of  the  C.  I.  F.  selling  price  of  the  140,800  coconuts  ex  S.  S.  'Cape  May' 
at  $59  per  thousand,  i.  e.  $7,684.16. 

"Third.  That  Seller  is  entitled  to  deduct  from  the  two  foregoing 
payments  the  sum  of  $2,755.42,  being  the  difference  in  freight  as 
deducted  from  Seller's  original  invoice  dated  August  30, 1920,  amounting 
to  $4,255.42,  and  the  total  amount  of  freight  paid  by  Buyer,  $1,500. 

"Fourth.  That  Seller  is  entitled  to  deduct  from  the  above  pay- 
ments, a  total  sum  of  $1,697.73  to  cover  charges  incurred  on  the  'Cape 
May'  shipment  as  allowed  in  the  fifth  paragraph  above. 

"Fifth.  Interest  is  to  be  computed  at  the  rate  of  6  1-2  per  cent  per 
annum  on  the  net  amount  of  this  award,  $10,241.18,  from  December 
20,  1920 — the  date  of  the  determination  of  rottage — until  date  of 
payment.  On  charges  incurred  which  are  being  allowed  Seller,  the 
dates  of  disbursement  being  unknown,  interest  is  computed  from  the 
same  date,  December  20,  1920,  as  well  as  on  rottage  for  which  Seller 
is  to  pay  Buyer."  (Foreign  Commerce  Association  Arbitration  on  Ap- 
peal No.  33A,  1921). 

Calms,  Heavy  Weather,  Swells,  Etc.  Not  "Accident"  Within 
the  Meaning  of  Copra  Contract  Casualty  Clause — A  sold  B  a  full 
cargo  of  Copra  per  S/V  "C.  D.  Bryant"  from  Tahiti  August-September 
loading.  The  vessel  was  not  loaded  in  August  or  September  and  Buyer 
rejected  the  cargo  on  arrival  at  Pacific  Coast  port  of  entry  on  the 
ground  of  late  shipment.  Seller  claimed  that  delay  was  due  to  calms, 
heavy  weather,  swells  and  slow  discharging  at  Guam  and  the  vessel 
was  thereby  delayed  and  that  this  came  under  the  contingencies  specified 
in  paragraph  four  of  the  contract. 

Held,  That  by  no  stretch  of  the  imagination  could  any  of  these 
causes  be  construed  as  an  accident.  It  is  a  well  known  fact  that  on 
nearly  anv  off  shore  passage  of  a  sailing  vessel  it  is  usual  to  have  some 
light  winds,  calms,  swells  and  gales,  but  these  are  not  accidents.  Had 
the  vessel  been  dismasted  or  damaged  in  a  material  way  then  it  would 
have  been  an  accident,  which,  under  the  contract,  would  have  extended 
the  loading  time  sixty  (60)  days.  Had  the  clause  or  any  contingencies 
beyond  Seller's  control  been  included  in  paragraph  four  our  decision 
would  have  been  different.  It  has  been  shown  that  Seller  had  a  cancelling 
date  under  the  charter  party  of  September  30th  and  could  have 
consulted  Buyer  as  to  his  wishes  in  case  the  vessel  did  not  make  loading 
port  in  time;  but  this  was  not  done  and  Buyer  had  no  opportunity  of 
accepting  a  later  date  or  extending  the  time  for  loading.  We  have 
taken   into   consideration   the   fact   that  the   contract,   as   originally 


212  COMMERCIAL   ARBITRATION 

presented  by  Seller  to  Buyer,  contained  the  word  expected  August- 
September  in  the  clause  designating  time  of  loading,  and  that  Buyer 
took  exception  to  the  word  expected  and  asked  for  its  elimination,  which 
was  done  by  Seller.  Therefore,  a  definite  date,  namely  August- 
September,  is  fixed  under  the  contract,  there  being  no  other  conditions 
in  the  contract  applying.  Rejection  by  Buyer  is  sustained.  (San 
Francisco  Chamber  of  Commerce  Arbitration,  1919). 

Breakdown  of  Vessel's  Engine  Excuses  Delay  in  Shipment  of 
Copra — Failure  to  Reach  Loading  Port  on  Time — Delay  Not 
Beyond  60  Days — A  Pacific  Coast  importer  sold  to  an  Eastern  manu- 
facturer a  quantity  of  Copra  to  be  shipped  "November-December- 
(1918)  January  (1919)  from  Sydney,  Australia,  or  South  Sea  Islands, 
Seller's  option."  The  shipment  was  not  made  in  either  of  the  specified 
months,  but  was  made  February  6,  1919,  per  the  power  vessel  "H.  C. 
Hansen/'  Upon  arrival  of  the  vessel  at  Pacific  Coast  port  of  entry, 
Buyer  rejected  the  copra  on  the  ground  that  Seller  had  breached  the 
contract  as  to  time  of  shipment.  Seller  claimed  that  the  delay  in 
shipment  was  due  to  a  breakdown  in  the  engine  of  the  vessel,  which 
had  unduly  delayed  the  passage  from  Melbourne  to  Tonga.  As  a 
result  of  this  breakdown  and  continued  trouble  with  the  motors,  the 
passage  from  Melbourne  to  loading  point  had  occupied  a  little  under 
three  months,  whereas  under  ordinary  conditions  the  passage  would 
have  been  made  in  thirty-five  days.  Seller  especially  pleaded  the 
following  clause  in  the  contract : 

"Seller  shall  not  be  responsible  to  Buyer  for  delayed  or  non- 
shipment  directly  or  indirectly  resulting  from  a  contingency 
beyond  his  control,  such  as  embargo,  act  of  government,  strike, 
fire,  flood,  drought,  hurricane,  war,  insurrection,  riot,  explosion, 
epidemic,  pestilence,  earthquake,  accident,  perils  of  the  sea, 
tidal  wave,  or  any  other  contingency  beyond  Seller's  control 
not  herein  enumerated.  If,  due  to  any  of  the  causes  pro- 
vided herein,  shipment  by  steamer  is  not  made  within  two 
months  or  by  sailing  vessel  within  three  months  after  the  con- 
tractual time  for  shipment,  contract  shall  terminate  with 
respect  to  any  goods  not  then  shipped." 

Buyer  contended  that  Seller  should  have  made  the  shipment  from 
Australia  and  thereby  been  within  the  contract  period. 

Held,  That  the  evidence  shows  that  there  was  not  only  one  break- 
down, but  that  there  was  a  series  of  break-downs  in  engines  of  the 
"H.  C.  Hansen"  on  the  trip  from  Willapa  to  Melbourne  and  also 


REPORTS  213 

continued  engine  trouble  on  the  trip  from  Melbourne  to  Tonga  and  that 
the  delay  in  making  shipment  at  Tonga  before  the  end  of  January, 
1919,  was  due  to  eaid  breakdowns  in  the  engines  which  made  necessary 
the  use  of  sail  power  in  order  to  make  progress. 

We  have  ascertained  from  the  San  Francisco  Board  of  Marine  Under- 
writ  ers  that  they  caused  the  "H.  C.  Hansen"  to  be  examined  prior  to 
sailing  from  Willapa  and  gave  certificate  that  the  vessel  was  in  good 
condition  at  the  time  for  the  voyage. 

We  decide  that  in  accordance  with  the  evidence  in  this  case  the 
breakdown  in  the  engines  was  an  accident  within  the  meaning  of  clause 
four  (above  noted)  of  the  contract  in  question,  and  the  delay  therefrom 
not  having  been  for  more  than  60  days  from  January  31,  1919,  we  find 
that  the  Buyer  is  not  excused  from  taking  delivery  and  we  decide  this 
case  in  favor  of  Seller.  (San  Francisco  Chamber  of  Commerce  Arbi- 
tration, 1919.) 

Seller  Not  Responsible  for  Car  Shortage  When  Specifically 
Exempted — A  sold  to  B  three  cars  of  Aberdeen  Lump  Coal.  Buyer 
requested  at  the  time  of  the  contract  that  one  car  be  shipped  before 
Aug.  15,  1920,  on  which  date  the  freight  rate  would  be  advanced.  The 
sale  was  made  verbally  and  confirmed  by  Seller  July  28,  1920,  the 
confirmation  containing  the  following  clause : 

"Shipment  to  be  made:  First  car  August  12th,  balance  ten  days 
apart.  All  orders,  contracts  and  agreements  are  contingent  upon  strikes, 
car  supply,  shortage  of  labor  and  other  delays  unavoidable  or  beyond  our 
control." 

The  first  car  was  not  shipped  until  August  28th.  When  Seller 
received  payment  for  the  first  car  he  found  a  deduction  had  been  made 
of  $81.60  for  the  freight  advance  after  August  15th,  Seller  having 
rendered  bill  with  the  advance  in  freight  included.  Seller  denied  the 
right  of  Buyer  to  deduct  this  advance  in  freight,  claiming  that  the  coal 
was  sold  F.  O.  B.  mines  and  that  the  delay  was  beyond  his  control  and 
that  Buyer  knew  of  the  conditions  regarding  possible  delays  specified 
in  the  acknowledgment  of  the  order  and  had  made  no  objection  to  same. 

Held,  That  Seller  was  unable  to  make  shipment  on  August  12th 
because  his  suppliers  at  the  mine  were  unable  to  ship  on  that  date  or 
before  August  15th,  owing  to  car  shortage,  six  days  having  been  lost 
in  August  on  that  account,  which  delay  was  beyond  Seller's  control. 

The  Seller's  Preference  List  dated  August  2nd  and  sent  to  his  mine 
supplier  only  five  days  after  the  sale  was  made,  orders  preference  to  be 
given  to  shipment  on  August  12th  of  the  car  in  question. 


214  COMMERCIAL   ARBITRATION 

As  the  Coal  was  sold  F.  O.  B.  mines  and  the  mine  was  unable  to 
ship  the  first  car  on  August  12th,  although  Seller's  order  and  Preference 
List  to  the  mine  specified  that  date  for  its  shipment,  we  find  that  under 
the  conditions  in  the  acknowledgment  of  the  order  Seller  is  not  liable 
for  the  delay,  as  we  feel  it  was  beyond  his  control. 

We  decide  that  the  extra  freight  is  for  the  account  of  Buyer  and 
that  Buyer  shall  pay  the  invoice  price  of  $209.70  for  the  first  car  of  coal, 
with  interest  at  6  per  cent  from  September  10,  1920,  until  said  payment 
is  made,  and  that  such  payment  shall  constitute  full  settlement  of  all 
claims  in  this  case.  (San  Francisco  Chamber  of  Commerce  Arbitration, 
1921.) 

Cancellation  of  Vessel's  Sailing  Not  Force  Majeure  Under 
Contract  Providing  January- February  Shipment — Late  Delivery 
Not  Allowed — A  sold  to  B  two  hundred  (200)  bags  of  Mandheling 
Coffee,  F.  A.  Q.,  ex  dock  San  Francisco,  net  arrival  weights,  actual 
tare.  Shipment  was  to  be  January-February,  1921,  from  Dutch  East 
Indies  by  vessel  or  vessels,  or  railroads  to  San  Francisco,  unless  other- 
wise specified.  Buyer  claimed  that  ninety-six  (96)  bags  were  delivered 
within  the  contract  period,  but  that  the  balance,  one  hundred  four  (104) 
bags,  was  not  so  delivered.  Seller,  while  admitting  non-shipment 
within  contract  period,  maintained  that  his  failure  to  deliver  was  due 
to  the  steamer  upon  which  the  coffee  was  to  be  shipped  having  been 
withdrawn.  Seller  set  up  that  the  withdrawal  of  the  steamer  was  an 
"unavoidable  interruption  of  transportation"  within  the  meaning  of 
Clause  71  of  the  contract  and  should  excuse  the  delay  in  delivering  and, 
having  shipped  the  coffee  on  another  steamer,  beyond  the  contract 
period,  he  was  entitled  to  make  later  tender. 

Buyer  denied  the  validity  of  the  reason  given  for  non-shipment, 
declaring  that  there  were  steamers  leaving  during  the  contract  period 
for  shipping. 

Held,  That  force  majeure,  as  provided  for  in  Clause  71  of  the  con- 
tract, does  not  apply  in  this  case  and  withdrawal  of  the  last  steamer 
to  sail  in  February  does  not  relieve  Seller  from  liability  for  delay  in 
shipment  as  Seller  had  both  January  and  February  in  which  to  ship, 
and  it  has  been  shown  that  other  vessels  were  available  for  shipment 
during  those  months. 

We  decide  that  Seller  is  in  default  in  not  making  shipment  as  per 
contract  and  Buyer  is  entitled  to  an  allowance  for  loss  of  profit  caused 
thereby  as  coffee  for  immediate  delivery  is  not  available  in  San  Fran- 
cisco. 


REPORTS  215 

The  last  steamer  sailing  from  Dutch  East  Indies  in  February  arrived 
in  San  Francisco  April  6,  1921,  and  we  fix  24  cents  per  pound  as  a  fair 
market  price  for  the  coffee  in  question  on  that  date  and  decide  that 
Seller  shall  allow  and  pay  to  Buyer  the  difference  between  the  contract 
sale  price,  20  cents  less  2  per  cent  and  24  cents  less  2  per  cent  per  pound 
on  the  amount  of  undelivered  coffee  in  question.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1921.) 

Buyer,  Consenting  to  Late  Shipment,  Cannot  Thereafter 
Reject  for  Such  Cause — Cancellation  of  Portion  Does  Not  Extend 
to  Entire  Quantity — A  sold  to  B  a  quantity  of  Chinese  Shelled 
Peanuts  under  a  contract  specifying  December-January  shipment 
from  the  Orient.  Prior  to  shipment,  Seller  advised  the  Buyer  that 
shipment  would  be  delayed,  without  assigning  any  valid  excuse  therefor, 
and  Buyer  acquiesced  in  the  delay  to  the  extent  that  he  did  not  cancel 
the  entire  contract  because  of  late  shipment  but  cancelled  as  to  400 
bags  only,  and  consented  to  the  shipment  of  the  remainder.  Subse- 
quently, Buyer  attempted  to  reject  the  entire  delayed  shipment.  The 
Seller  contested  the  cancellation,  and  showed  that  under  date  of  March 
16th  he  had  advised  Buyer  of  the  delay  in  shipment,  and  on  the  following 
day  Buyer  advised  that  he  would  cancel  400  bags,  leaving  600  bags 
to  be  delivered.  On  March  17th  Buyer  asked  to  cancel  200  additional 
bags,  and  on  the  18th  requested  an  additional  cancellation  of  100  bags, 
leaving  300  bags  to  be  delivered. 

Held,  That  the  evidence  clearly  showed  that  while  shipment  had 
been  delayed  beyond  the  contract  period,  Buyer  had  expressed  his 
willingness  to  accept  a  portion  of  the  original  contract  quantity, 
although  he  had  a  right  when  put  upon  notice  to  cancel  the  whole 
contract,  and  having  failed  to  so  cancel  he  is  obligated  to  take  delivery 
of  600  bags.    (San  Francisco  Chamber  of  Commerce  Arbitration,  1920). 

Shipping  Instructions  Do  Not  Control  Shipment — Buyer 
Cannot  Sustain  Claim  for  Delay  When  Shipment  Is  Made 
Within  Contract  Time — A  San  Francisco  merchant  sold  to  a  rice 
mill  at  the  same  place  1,000  pockets  Choice  California  Rice,  F.  O.  B. 
cars,  December-January-February  shipment.  January  8th  the  Buyer 
gave  shipping  instructions,  which  were  not  acknowledged  by  Seller, 
and  on  February  13th,  Seller  presented  his  invoice  and  bill  of  lading 
dated  in  February.  Buyer  rejected  the  tender  on  the  ground  that 
there  had  been  a  lapse  of  five  weeks  between  the  date  shipping  in- 
structions had  been  given  and  the  date  of  shipment,  which  he  claimed 
was  an  unreasonable  delay  and  gave  him  the  right  to  reject. 


216  COMMERCIAL   ARBITRATION 

Held,  That  contract  called  for  December- January-February  de- 
livery, and  Seller  having  tendered  proper  delivery,  Buyer  is  obliged  to 
accept.    (Rice  Association  of  California  Arbitration  No.  29,  1920). 

January  "Received  for  Shipment"  Lading  Not  Conclusive 
Evidence  of  January  Shipment — Viseed  by  Cuban  Consul  at 
Later  Date  and   Surveyor's  Certificate   Issued   Subsequently — 

A  sold  to  B  240  tons  of  Siam  Usual  Rice,  December-January  shipment 
from  Hongkong  to  Cuba.  There  was  delivered  against  the  contract 
140  tons,  and  Buyer  rejected  the  documents  covering  the  remaining 
100  tons  on  the  following  grounds: 

(1)  Although  dated  January  31st,  there  was  an  apparent 
discrepancy  in  the  bill  of  lading,  the  usual  wording  having 
been  changed  from  "shipped  in  apparent  good  order  and 
condition"  to  "Received  for  shipment",  etc. 

(2)  The  bill  of  lading  was  not  viseed  by  the  Cuban 
Consul  until  February  9th,  nine  days  after  its  issuance. 

(3)  The  Hongkong  Surveyor's  Certificate  indicated  that 
the  surveyor  had  attended  at  the  godowns  to  examine  the 
cargo  from  February  6th  and  the  final  certificate  was  dated 
February  11th,  indicating  that  shipment  was  not  made  in 
January. 

Seller  contended  that  his  documents  were  in  order,  the  bill  of 
lading  reading  received  for  shipment  bound  to  be  transported  by  Steamer 
St.  Andrew,  and  that  it  was  evident  that  his  supplier  had  booked  the 
space  for  shipment  in  January,  and  through  some  unavoidable  cause 
was  unable  to  ship  so  as  to  conform  literally  with  the  contract.  Inas- 
much as  the  contract  provided  that  Seller  shall  not  be  responsible  for 
delays  or  any  other  unavoidable  causes  beyond  Seller's  control,  the  delay 
was  excusable. 

Held,  That  the  bill  of  lading,  notwithstanding  it  is  dated  January 
31st,  does  not  constitute  January  shipment,  as  it  is  apparent  from 
the  change  in  the  printing  of  said  bill  of  lading  from  shipped  in  apparent 
good  order  and  condition  by  to  the  notation  in  ink  reading,  received  for 
shipment  from  and  also  the  change  on  the  second  line  St.  Andrew  now  at 
Hongkong,  to  St.  Andrew  from  Hongkong  that  the  steamship  company 
knew  the  goods  could  not  be  shipped  in  January,  which  is  borne  out  by 
Lloyd's  Register,  which  shows  that  the  "St.  Andrew"  did  not  arrive 
in  Hongkong  until  February  3rd.     We  have  examined  several  sets 


REPORTS  217 

of  documents  for  the  same  boat,  none  of  which  show  changes  as 
mentioned  above. 

This  evidence,  combined  with  the  fact  that  the  Hongkong  sur- 
veyors certificate  states  that  the  surveyor  did  not  attend  the  godowns 
until  February  6th,  convinces  us  that  the  shipment  was  not  made 
within  the  time  specified  in  the  contract,  and  we  therefore  decide  that 
the  Seller  has  not  made  a  proper  tender  of  the  One  Hundred  (100)  tons 
in  question  and  consequently  Buyer  is  not  obligated  to  accept  this 
Rice.     (Rice  Association  of  California  Arbitration  No.  25,  1920). 

Dissenting  Opinion — One  of  the  arbitrators  dissented  from  the 
foregoing  opinion,  and  gave  the  following  reasons  therefor: 

"All  the  bills  of  lading  of  the  prominent  steamship  lines 
read  not  shipped  in  apparent  good  order  but  received  in  apparent 
good  order  for  shipment.  I  contend  that  the  date  of  the  lading 
is  final." 

(Dissenting  Opinion  Rice  Association  of  California  Arbitration 
No.  25,    1920). 

Shipment  Denned — Delay  in  Shipment  Permitted  When 
Contract  Provides  for  Variation  in  Time — When  New  Evidence 
Will  Be  Received  by  Arbitrators  on  Appeal — A  Pacific  Coast 
importer  sold  to  a  Pacific  Coast  Buyer  a  quantity  of  Rice  for  shipment 
from  Hongkong  in  March,  1920.  The  contract  contained  a  clause 
providing  variation  of  ten  days  in  time  of  shipment  or  arrival  not  to  con- 
stitute grounds  for  rejection. 

The  bill  of  lading  was  dated  April  12.  1922.  Buyer  rejected  the 
goods  on  the  ground  that  shipment  was  not  made  within  contract  period. 

Held,  That  shipment,  not  having  been  made  within  contract 
period,  rejection  was  sustained.     (Rice  Association  Arbitration,  1920). 

Reversed  on  Appeal — Seller  subsequently  asked  for  a  reconsidera- 
tion on  the  ground  that  new  evidence  had  been  discovered  which  would 
show  that  the  rice  in  question  was  actually  loaded  on  board  the  vessel 
on  April  9th,  notwithstanding  the  bill  of  lading  was  dated  April  12th, 
and  that  under  the  variation  of  time  clause  in  his  contract  he  was  per- 
mitted to  make  such  delayed  shipment.  The  Rice  Association  refused  to 
entertain  a  reconsideration  of  the  matter  on  the  ground  that  the  by-laws 
of  the  organization  provided  that  rehearing  could  not  be  had  after  five 
days  had  elapsed.  Thereupon  the  Seller  appealed  to  the  Committee 
on  Appeals  of  the  San  Francisco  Chamber  of  Commerce.  The  arbi- 
trators on  appeal  said: 


218  COMMERCIAL   ARBITRATION 

"As  the  by-laws  of  the  Chamber  of  Commerce  provide  that  arbitra- 
tion proceedings  shall  be  conducted  so  as  'to  promote  substantial 
justice'  and  Seller  claimed  that  the  new  evidence  was  material  and 
important  and  that  non-consideration  of  this  evidence  would  work  a 
sacrifice  of  justice,  the  very  thing  a  commercial  arbitration  is  intended 
to  avoid,  the  Committee  decided  that,  to  render  substantial  justice,  the 
new  evidence  should  be  considered  by  them  so  that  they  might  decide 
as  to  whether  it  was  material  evidence.  Upon  this  situation  being 
explained  to  the  representatives  of  both  parties  at  interest,  who  were 
present  at  the  meeting,  they  both  agreed  that  it  would  be  satisfactory  to 
them  to  have  the  Committee  on  Appeals  consider  the  new  evidence  and 
waived  any  protest  against  consideration  of  such  evidence  in  this  case. 

"The  Committee  then  proceeded  to  examine  the  new  evidence 
and  found  it  to  consist  of  the  following: 

"1st.  An  inquiry  by  cable  dated  June  24,  1920,  from  Sellers  to 
their  suppliers  in  Hongkong,  as  to  when  the  rice  was  actually  on  board 
the  'Charlton  Hall',  that  being  the  vessel  upon  which  it  was  shipped. 
Suppliers  by  cable  dated  June  25th  replied  that  the  2,000  bags  in 
question  were  on  board  vessel  on  April  9th. 

"Sellers  also  submit  in  evidence  the  original  bill  of  lading  with  the 
following  endorsement  on  the  back  thereof,  by  the  representatives  of 
the  shipping  agents  for  the  'Charlton  Hall:' 

"In   accordance   with    cable   instructions  from  the  agents 

for  S.  S.  'Charlton  HalV  we  hereby  certify  as  their  representatives 
that  goods  covered  by  this  bill  of  lading  were  actually  loaded  and 
shipped  on  April  9,  1920. 

"We  find  that  actual  delivery  to  a  vessel  and  the  goods  being  loaded 
on  board  constitutes  shipment  by  a  Seller  and  when  it  can  be  shown 
that  this  was  done  in  any  particular  case  within  the  required  time, 
the  date  of  the  bill  of  lading  need  not  be  considered  as  date  of  shipment. 

"We  cannot  disregard  this  official  statement  by  shipping  agent  as 
to  when  the  goods  were  actually  loaded  on  board  and  must  consider 
it  as  material  evidence  in  this  case.  While  the  contract  provides  that 
shipment  was  to  be  'March,  1920,  from  Orient  to  New  York',  it  also 
contains  the  clause  'Variation  of  ten  days  in  time  of  shipment  or 
arrival  not  to  constitute  ground  for  rejection,'  and  if  shipment  were 
made  by  Sellers  on  or  before  April  10th  Buyers  could  not  reject  the 
goods  on  account  of  late  shipment. 

"We  decide  upon  the  evidence  before  us  that  shipment  was  made 
within  the  ten  days'  extension  of  time  provided  in  the  contract. 

"We  therefore  reverse  the  decision  of  the  Arbitration  Committee 
in  this  case  and  decide  that  under  the  terms  of  the  contract  Buyers  are 
not  entitled  to  reject  the  shipment  in  question."  (San  Francisco  Cham- 
ber of  Commerce  Arbitration  on  Appeal  from  Rice  Association  of 
California,  1920). 


REPORTS  219 


Shipping 


A  shipper's  agent,  having  consented,  impliedly  or  otherwise,  to 
stowage  of  Tar  in  the  poop  of  a  vessel,  the  shipper  cannot  sustain 
a  claim  for  damage  to  the  tar  by  reason  of  improper  stowage.  But  the 
shipper  and  the  time  charterer  each  were  required  to  pay  one-half  the 
cost  of  reconditioning  the  barrels,  and  one-half  of  any  other  known 
loss  through  wrongful  stowage  of  the  tar.  (San  Francisco  Chamber  of 
Commerce  Arbitration  on  Appeal,  1912,  Page  227). 

A  vessel  is  responsible  for  pilferage,  for  short  delivery  of  actual 
cases,  packages  or  pieces  and  for  breakage,  except  for  broken  bottles 
and  contents  of  same.  (San  Francisco  Chamber  of  Commerce  Arbitra- 
tion, 1912,  Page  227). 

A  carrier  having  a  contract  of  affreightment  covering  Sugar  is 
responsible  for  excess  freight  charges  resulting  from  shutting  out 
the  cargo  and  forcing  shipper  to  ship  by  another  carrier.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1918,  Page  229). 

When  a  charter  party  specifies  the  port  of  discharge  of  a  vessel  as 
"San  Francisco  (Cal.)  U.  S.  A."  the  charterer  cannot  require  discharge 
at  Oakland  without  paying  extra  expense  of  shifting  the  vessel  to 
Oakland.  (San  Francisco  Chamber  of  Commerce  Arbitration,  1920, 
Page  222). 

Shortage  in  rail  equipment  whereby  a  charterer  is  prevented  from 
unloading  the  cargo  on  cars  will  not  release  charterer  of  responsibility 
for  demurrage  on  vessel.  (San  Francisco  Chamber  of  Commerce  Arbi- 
tration 1920,  Page  222). 

When  Lumber  is  sold  ex  ship's  tackles,  the  Buyer  is  responsible 
for  State  Tolls;  and  when  the  sale  is  ex  dock,  the  tolls  are  for  Seller's 
account.  (San  Francisco  Chamber  of  Commerce  Arbitration,  1919, 
Page  221). 

The  term  "free  berth"  means  a  berth  free  of  obstruction  and  ready 
to  receive  vessel  and  not  free  of  expense.  (San  Francisco  Chamber 
of  Commerce  Arbitration,  1916,  Page  226). 

When  there  is  an  excess  quantity  of  Laths  shipped,  whereby  the 
vessel's  carrying  capacity  is  decreased,  the  captain  of  the  vessel  must 
protest  at  the  time  of  loading.  It  will  be  too  late  to  protest  after  sailing, 
and  claim  for  freight  on  the  cargo  space  will  be  disallowed.  (San  Fran- 
cisco Chamber  of  Commerce  Arbitration,  1914,  Page  223). 


220  COMMERCIAL   ARBITRATION 

Under  a  charter  party  specifying  discharge  at  Port  of  San  Fran- 
cisco, charterer  may  not  order  discharge  at  Port  Costa  without  paying 
cost  thereof,  Port  Costa  not  being  a  part  of  the  port  of  San  Francisco. 
(San  Francisco  Chamber  of  Commerce  Arbitration,  1917,  Page  223). 

Any  claim  for  short  carrying  of  a  cargo  of  Copra  must  be  made  at 
the  port  of  shipment  and  not  on  vessel's  arrival  at  destination.  (San 
Francisco  Chamber  of  Commerce  Arbitration,  1918,  Page  223). 

Vessel  Responsible  for  Short  Delivery  of  Grain — Clean  Bill 
of  Lading  Governs — A  shipper  of  grain  from  Portland,  Ore.  to  China 
Basin  (San  Francisco)  and  Port  Costa  made  claim  for  short  delivery 
against  the  vessel.  The  vessel  failed  to  obtain  a  receipt  for  the  grain 
delivered  at  China  Basin.  The  evidence  showed  that  1,417,648  pounds 
of  grain  were  received  on  the  vessel  and  1,401,490  pounds  were  delivered 
according  to  weights  of  the  Grain  Inspection  Department  of  the  San 
Francisco  Chamber  of  Commerce,  a  shortage  of  16,158  pounds.  It 
was  claimed  by  the  vessel,  supported  by  the  evidence,  that  some  of  the 
bags  in  which  the  grain  was  shipped  were  second  hand  and  sunburnt, 
but  the  bill  of  lading  gave  a  clean  receipt.  The  evidence  further  showed 
that  the  different  lots  of  grain  were  not  properly  separated  when 
stowed,  so  as  to  prevent  possible  mixing  in  delivery,  a  fact  which 
undoubtedly  caused  some  of  the  shortage. 

Held,  That  the  vessel  should  be  allowed  a  deduction  of  the  total 
shortage  of  J^  (one-half)  of  one  per  cent  (1%)  of  1,417,648  pounds, 
or  7,088  pounds,  and  in  view  of  the  clean  bill  of  lading,  the  vessel  is 
responsible  for  payment  of  the  remainder,  or  9,070  pounds.  (San 
Francisco  Chamber  of  Commerce  Arbitration,  1917). 

Responsibility  for  Demurrage — Inability  to  Obtain  Use  of 
Crane  Does  Not  Excuse — Delay  of  Captain  in  Signing  Bills  of 
Lading — The  owners  of  a  schooner  made  claim  against  the  charterer 
for  demurrage  incurred  while  loading  the  vessel  at  Newcastle,  N.  S.  W. 
in  performance  of  a  charter  party  dated  October  26,  1911.  The 
charterer  claimed  that  delay  in  loading  was  occasioned  by  his  inability 
to  obtain  the  use  of  a  crane.  The  charter  party  contained  this  clause: 
Vessel  to  be  loaded  in  the  usual  and  customary  manner  within  fifteen 
colliery  working  days.  The  charterer  asserted  that  the  provision 
in  the  clause  of  exceptions,  but  in  causes  beyond  the  control  of  the  charterers 
absolved  him  from  responsibility  for  demurrage,  his  failure  to  obtain 
the  use  of  the  crane  for  loading  being  beyond  his  control. 

Held,  That  the  foregoing  exception  clause  cannot  be  made  to  apply 
to  the  delay  in  obtaining  the  use  of  the  crane. 


REPORTS  221 

In  the  same  matter,  the  charterer  claimed  one-day's  demurrage 
allowance  on  account  of  the  captain  not  having  signed  bills  of  lading 
within  twenty-four  hours  after  completion  of  loading,  as  provided  by 
the  charter  party.  The  captain  testified  that  he  called  frequently 
at  the  offices  of  the  agents  of  the  charterer  on  the  day  loading  was 
completed  and  that  bills  of  lading  were  not  ready  for  his  signature 
until  5:30  p.  m.  on  that  day;  that,  owing  to  the  necessity  of  his  filing 
protest  with  the  United  States  Consul  to  protect  his  demurrage,  he 
was  unable  to  sign  the  bills  until  the  morning  of  the  next  day. 

Held,  That  the  delay  in  signing  the  bills  of  lading  was  reasonable 
in  the  circumstances  and  the  counter-claim  of  one  day's  demurrage  was 
disallowed.    (San  Francisco  Chamber  of  Commerce  Arbitration,  1911). 

Discharging  Cargo  at  Salina  Cruz — Meaning  of  Term  "As 
Customary* ' — A  vessel  -owner  made  claim  for  demurrage  against 
shipper  Under  a  contract  of  affreightment,  containing  the  following 
clause:  Discharge — To  be  discharged  at  Salina  Cruz  as  customary  at 
not  less  than  Six  Hundred  tons  per  working  day.  Vessel  to  be  berthed 
within  five  days  after  arrival  at  Salina  Cruz. 

Held,  That  the  words  to  be  discharged  at  Salina  Cruz  as  customary 
mean  that  Sundays,  rainy  days  and  legal  holidays  shall  not  be  counted 
as  lay  days,  and  therefore  the  claim  that  Sundays  and  rainy  days 
should  be  counted  as  working  days  is  untenable  and  is  disallowed. 
(San  Francisco  Chamber  of  Commerce  Arbitration,  1912). 

Responsibility  for  "State  Tolls' '  Under  Sale  of  Lumber  Ex 
Ship's  Tackles — Differentiation  Between  Terms  "Ship's  Tackles" 
and  "Ex  Dock"1 — A  sold  to  B  a  lot  of  Lumber,  ex  a  named  vessel, 
as  "now  lying  on  wharf  at  foot  of  Twenty-fifth  Street,  San  Francisco." 
This  sale  was  in  fulfillment  of  another  agreement  dated  July  20,  1918. 
Seller  charged  Buyer  the  State  toll  on  the  lumber,  claiming  that  the 
sale  was  "ex  ship's  tackles,"  and  also  for  the  charges  incurred  for 
rough  piling.  Buyer  contested  these  charges,  claiming  that  it  was  an 
impossibility  for  him  to  take  delivery  ex  ship's  tackles,  the  cargo  already 
having  been  discharged.  Buyer  further  pointed  out  that  the  State 
tolls  had  already  been  paid  by  Seller,  or  in  any  event  he  was  responsible 
therefor. 

Held,  That  Buyer  could  not  take  delivery  at  ship's  tackles.  Had 
Seller  intended  Buyer  to  pay  these  charges,  the  agreement  should  have 
provided  that  Buyer  must  pay  accrued  charges  against  the  cargo. 
It  would  appear  unreasonable  to  expect  charges  to  be  retroactive 
against  Buyer,  as  for  instance,  if  there  had  been  fire  insurance  or  wharf 
rental  incurred  and  Buyer  had  been  asked  to  pay  same  in  addition  to 


222  COMMERCIAL   ARBITRATION 

sale  price,  and  we  feel  Buyer  was  justified  in  believing,  when  he  agreed 
to  the  increased  price,  that  said  price  included  expenses  incurred  by 
Seller  for  piling  and  tolls. 

We  cannot  agree  with  Buyer's  contention  "that  even  under  the 
original  contract  we  were  not  liable  for  State  Tolls"  as  it  is  the  recognized 
custom  of  the  port  that  a  sale  ex  ship's  tackles  means  that  State  Tolls 
are  for  Buyer's  account  when  possession  is  taken  at  ship's  tackles. 

We  decide  that  the  sale  of  this  particular  lot  of  lumber,  being  made 
under  the  agreement  of  Nov.  1,  1918,  which  specified  that  the  lumber 
was  then  on  a  certain  wharf  and  that  inspection  of  it  would  be  made  on 
said  wharf  before  final  acceptance,  was  ex  wharf  and  not  at  ship's 
tackles  and  that  the  charges  for  piling  and  for  State  Tolls  are  for  the 
account  of  Seller.  (San  Francisco  Chamber  of  Commerce  Arbitration, 
1919). 

When  Charter  Party  Specifies  Discharge  at  San  Francisco, 
Discharge   at  Oakland   Not   Permitted   Without   Paying  Costs 

— Commencement  of  Lay  Days — Under  a  charter  party  which 
specified  the  port  of  discharge  of  a  vessel  as  "San  Francisco  (Cal.) 
U.  S.  A.",  the  charterer  desired  the  vessel  to  proceed  to  Oakland,  on 
San  Francisco  Bay,  for  discharge.  The  owner  claimed  payment  by 
the  charterer  of  the  extra  expense  incurred  by  reason  of  shifting  the 
vessel  to  Oakland. 

Held,  That  the  vessel,  under  the  wording  of  the  particular  charter 
party  in  this  case,  cannot  be  compelled  to  discharge  in  Oakland,  Cali- 
fornia, as  the  charter  party  distinctly  provides  that  she  was  to  proceed 
to  San  Francisco  and  discharge  there.  The  charterer  shall  therefore 
reimburse  the  owner  for  the  extra  expense  incurred. 
Another  question  in  issue  between  the  parties  was: 

"Whether  lay  days  shall  commence  to  count  24  hours  after 
vessel  was  ready  to  discharge  or  at  the  time  discharge  commenced, 
and  how  much  demurrage  vessel  is  entitled  to  receive,  if  any." 

Held,  That  when  a  vessel  commences  to  discharge  prior  to  the 
expiration  of  the  24  hours'  notice  given  by  the  master,  lay  days  com- 
mence to  count  at  the  time  discharge  begins.  Therefore,  the  owner  is 
entitled  to  demurrage  for  two  days  and  203^  hours,  viz.:  £141:17:1. 

A  third  issue  was  the  claim  of  the  charterer  that  the  delay  in  dis- 
charge was  due  to  a  shortage  in  rail  equipment,  and  because  of  a  lack 
of  cars  he  could  not  unload  the  vessel's  cargo  into  cars. 

Held,  That  shortage  in  rail  equipment  does  not  excuse  the  charterer 
from  responsibility  for  vessel's  demurrage.  (San  Francisco  Chamber 
of  Commerce  Arbitration,  1920). 


REPORTS  223 

Excess  Quantity  Laths  in  Lumber  Cargo — Captain  Must 
Protest  When  Offered — Too  Late  When  Loading  Completed — 
Charter  Party  Should  Be  Specific — A  vessel  under  charter  to  B 
loaded  lumber  at  Gray's  Harbor  for  San  Pedro  for  the  account  of  C. 
A,  owner  of  the  steamer,  claimed  that  an  excessive  quantity  of  laths 
was  shipped  in  the  vessel  and  consequently  the  vessel's  carrying 
capacity  was  decreased  to  the  amount  of  about  90  M  feet,  for  which 
claim  was  made  for  freight  at  $3.50  per  M  of  lumber  from  the  points 
named  above. 

B  admitted  that,  if  shipped,  such  a  quantity  of  laths  would  be 
excessive,  but  claimed  he  had  no  knowledge  of  the  quantity  of  laths 
shipped  and  that  he  had  received  no  protest  from  A  until  after  the 
vessel  had  been  loaded  and  had  sailed.  It  was  contended  that  the 
captain  of  the  vessel  should  have  protested  at  the  time  the  cargo  was 
loaded  and  that  B  should  have  been  notified  so  he  might  have  taken 
some  steps  to  protect  his  interests. 

The  captain  of  the  vessel,  when  receiving  cargo,  did  not  protest  to 
the  charterers  that  there  was  an  excessive  quantity  of  laths  offered. 
Under  the  charter  party  he  could  have  demanded  a  full  and  complete 
cargo  of  lumber  as  fast  as  the  vessel  could  stow  it  and  failing  to  receive 
what  would  have  been  a  proper  cargo,  demurrage  would  have  accrued 
while  the  vessel  was  waiting  to  receive  instructions  from  the  owners 
whether  the  quantity  of  laths  furnished  should  be  accepted  or  not. 

Held,  That  failing  to  protest  at  the  time  of  loading  the  quantity 
of  laths  furnished,  it  was  too  late  for  the  captain  to  make  such  protest 
after  the  vessel  had  completed  loading  and  sailed,  at  which  time  he 
did  file  protest  with  the  vessel's  owners. 

After  making  the  foregoing  award,  the  arbitrators  said : 
"We  do  not  mean  to  imply  that  there  is  no  limit  to  the  quantity 
of  laths  that  can  be  furnished  in  a  full  and  complete  cargo  of  lumber, 
as  specified  in  Memorandum  of  Charter  dated  November  18,  1913, 
submitted  in  this  case,  but  we  consider  the  Charter  Party  faulty  in  not 
specifying  the  percentage  of  laths  that  could  be  shipped,  and  we 
recommend  that  all  charter  parties  should  specify  the  percentage  of 
laths,  and/or  pickets,  and/or  shakes,  and/or  shingles  which  may  be 
shipped  as  part  of  a  cargo  of  lumber."  (San  Francisco  Chamber  of 
Commerce  Arbitration,  1914). 

Port  Costa  Not  Part  of  Port  of  San  Francisco— Charter  Party 
Should  be  Specific — The  charterer  of  a  vessel  carrying  a  cargo  of 
nitrate  to  San  Francisco  ordered  the  vessel  to  discharge  at  Port  Costa 
without  paying  extra  cost  therefor.     The  charter  party  and  the  bill  of 


224  COMMERCIAL   ARBITRATION 

lading  gave  San  Francisco  as  the  destination.  The  charterer  main- 
tained that  Port  Costa  is  recognized  as  being  part  of  the  Port  of  San 
Francisco,  while  the  owner  of  the  vessel  insisted  that  this  is  not  the 
custom,  and  claimed  that  where  Port  Costa  was  desired  as  a  point  of 
discharge  it  should  be  specified. 

Held,  That  Port  Costa  is  not  recognized  as  part  of  the  Port  of  San 
Francisco,  and  that  it  should  be  specifically  covered  in  the  charter 
party.  Charterer  shall  pay  all  extra  expense  incurred  by  discharging 
at  Port  Costa.  (San  Francisco  Chamber  of  Commerce  Arbitration, 
1917.) 

Short  Carrying  of  Cargo — Claim  and  Demand  Must  be  Made 
at  Port  of  Shipment — Use  of  Certain  Space  for  Ship's  Stores — 

The  charterer  of  a  schooner  fixed  to  carry  a  cargo  of  Copra  from  Papeete 
to  the  Pacific  Coast  made  claim  against  the  owners  of  the  vessel  for  reim- 
bursement for  his  loss  occasioned  through  the  improper  stowage  of 
the  cargo.  Upon  arrival  of  the  vessel  at  San  Francisco  the  charterer 
maintained  that  he  had  sustained  damage  because  there  was  available 
space  in  the  vessel  which  had  not  been  utilized  for  cargo;  that  there  was 
space  aft  of  the  bulkhead,  located  in  the  afterpart  of  the  vessel,  which 
was  not  used  and  that  there  also  was  unoccupied  space  forward. 

Held,  That  any  claim  for  short  carrying  should  have  been  made 
at  the  port  of  shipment,  where  demand  should  have  been  made  on  the 
captain  to  fill  the  space  claimed  to  be  available,  and  if  he  refused  to 
fill  the  said  space,  formal  protest  should  then  have  been  lodged.  The 
captain  gave  up  to  cargo  certain  space  to  which  he  was  entitled  for  his 
crew  and  ship's  stores,  which  he  was  not  required  to  do,  and  he  was  not 
required  to  use  any  space  aft  of  the  bulkhead  as  claimed  by  charterer, 
as  it  is  not  customary  to  use  this  space  for  cargo.  As  to  the  failure  to 
utilize  space  forward,  it  was  in  evidence  that  the  vessel  already  was 
out  of  trim  and  had  this  space  been  filled  this  condition  would  have 
been  greater.  According  to  the  charter  party  the  charterer  had  the  right 
to  ship  cargo  on  the  deck,  and  had  he  availed  himself  of  this  privilege, 
the  vessel  would  have  carried  far  greater  tonnage  and  also  have  been 
able  to  trim  properly.  The  claim  for  damages  for  short  carrying  is 
disallowed.     (San  Francisco  Chamber  of  Commerce  Arbitration,  1918.) 

Damage  to  Vessel  by  Tug  Having  Her  in  Tow — Tug  Not 
Liable  Unless  Carelessness  or  Neglect  is  Shown — A  vessel  being 
towed  to  sea  from  Honolulu  was  damaged  by  the  tug,  the  cost  of  repairs 
being  $923.50.  The  owner  of  the  vessel  made  claim  against  the  owner 
of  the  tug  for  reimbursement,  claiming  that  the  tug  was  at  fault. 


REPORTS  225 

Held,  That  the  whole  operation  of  taking  the  vessel  from  along  the 
wharf  and  out  to  sea  was  entirely  in  charge  of  the  pilot  and  master  of 
the  vessel.  That  the  Territorial  pilot  in  charge  of  the  vessel  knew  the 
size  of  the  ship  and  the  capacity  of  the  tug  having  it  in  tow  and  the 
weather  conditions,  and  was,  therefore,  in  a  position  to  know  what 
steps  were  necessary  in  order  to  clear  the  vessel  safely. 

In  our  opinion,  the  tug  cannot,  in  this  case,  be  held  liable  unless 
it  had  been  clearly  proven  that  the  tug  had  been  careless  or  guilty  of 
neglect  and  it  was  not  so  proven  to  the  Arbitrators. 

We  decide  that  the  damages  claimed  in  this  case,  amounting  to 
$923.50,  are  for  the  account  of  the  owner  of  the  vessel.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1919.) 

Dock  Rental  Chargeable  to  Vessel  at  San  Francisco  When 
All  Cargo  Space  is  Chartered  but  Vessel  Operated  by  Owners — 
Custom  of  Port — A  Pacific  Coast  merchant  chartered  "the  whole  of 
a  vessel  for  a  cargo  of  merchandise  from  Manila  to  San  Francisco  at 
the  rate  of    $50  per  long  ton  on  8000  long  tons  dead  weight." 

The  charter  party  contained  the  following  clause :  Cargo  to  be  received 
and  delivered  at  the  vessel's  tackles  at  port  of  loading  and  discharge. 

Under  this  clause,  the  Owner  claimed  that  the  Shipper  should  pay 
the  dock  rental,  which  is  the  charge  made  by  the  State  Board  of  Harbor 
Commissioners  at  the  Port  of  San  Francisco  for  space  on  the  dock  at 
which  the  vessel  discharged  its  cargo.  The  Shipper  contended  that 
cargo  is  not  taken  from  the  sling  before  it  is  deposited  upon  the  dock 
and  that  under  the  custom  at  the  Port  of  San  Francisco  dock  rental  is 
a  charge  against  the  vessel  and  not  against  the  cargo. 

Held,  That  under  the  custom,  delivery  at  ship's  tackles  means 
delivery  on  the  dock  at  a  point  within  reach  of  ship's  tackles.  Further- 
more, that  it  is  the  rule  of  the  Harbor  Commission  at  this  port  to  impose 
the  charge  for  dock  rental  against  the  vessel  and  that  such  is  the  custom 
of  the  port  at  San  Francisco,  although  at  other  ports  .on  the  Pacific 
Coast,  such  charge  is  made  against  the  cargo. 

Shipper  in  this  instance  chartered  cargo  space  and  did  not  operate 
the  vessel,  as  the  charter  was  not  a  time  charter. 

It  is  not  within  the  province  of  this  Committee  to  decide  whether 
this  method  of  charging  dock  rental  against  the  vessel  is  a  desirable  one 
or  not  for  this  port,  but  such  being  the  established  rule  of  the  Harbor 
Commission,  and  it  having  been  in  force  for  some  time  past,  we  find  in 
favor  of  the  Shipper  and  we  decide  that  the  dock  rental  in  question  is 
a  charge  against  the  vessel  and  shall  be  paid  by  agent  for  the  vessel's 
owners.     (San  Francisco  Chamber  of  Commerce  Arbitration,  1918.) 


226  COMMERCIAL   ARBITRATION 

Shipper  Responsible  for  Transshipment  Charges  on  Steel 
Rails — Charge  Must  be  Actual — An  American  exporter  of  Steel 
Rails,  under  a  contract  of  affreightment  with  a  carrier,  agreed  that 
transshipment  charges,  if  any,  shall  be  for  account  of  shipper.  The  Rails 
were  transshipped  at  Yokohama  to  Kobe,  and  the  carrier  made  claim 
for  $1498,  which  is  claimed  was  the  expense  incurred  in  transshipment. 

Held,  That  under  the  terms  of  the  agreement  the  shipper  was 
obliged  to  pay  transshipment  charges,  as  claimed  by  carrier.  (San  Fran- 
cisco Chamber  of  Commerce  Arbitration,  1921.) 

The  Shipper  appealed  from  the  award,  alleging  error  on  the  part 
of  the  arbitrators.  The  arbitrators  on  appeal  sustained  the  finding 
that  the  Shipper  was  obligated  for  the  extra  expense,  but  reduced  the 
amount  awarded.     The  arbitrators  on  appeal  said: 

"We  agree  with  the  Arbitration  Committee  that  Shipper,  through  his 
Seattle  representative,  having  agreed  that  Transshipment  charges,  if  any, 
are  for  the  account  of  shipper,  such  charges  should  be  paid  by  shipper 
in  this  case,  but  we  find  that  such  charges  must  be  the  actual  cost  of 
the  items  entering  into  the  transshipment  and  without  profit  to  carrier 
or  its  vessel,  which  carried  the  goods  to  Kobe. 

"We  find  no  evidence  to  disprove  carrier's  claim  that  there  was  a 
serious  congestion  at  Yokohama  at  the  time  the  'Uralsan  Mam' 
arrived  there  which  prevented  the  goods  being  transhipped  to  Kobe 
on  the  same  vessel  and  which  necessitated  assorting  and  storage  charges. 

"Carrier  in  its  reply  to  the  appeal,  states  that  the  Y  3.50  per  ton 
freight  was  only  the  charge  for  reloading  at  Yokohama  and  unloading 
at  Kobe,  which  would  not  include  freight  transportation  from  Yoko- 
hama to  Kobe."  (San  Francisco  Chamber  of  Commerce  Arbitration  on 
Appeal,  1921). 

Term  "Free  Berth"  Interpreted  to  Mean  Berth  Free  of 
Obstruction  and  Ready  to  Receive  Vessel — Does  Not  Mean 
Free  of  Expenses  —  A  contract  was  made  between  a  shipper 
and  the  owners  of  a  steamship  for  the  transportation  of 
a  cargo  of  Flour  from  South  Vallejo,  California,  to  Charleston, 
South  Carolina,  and  New  York  City,  the  contract  containing 
this  clause:  "Also  that  consignee  will  provide  suitable  free  berth, 
without  delay,  at  Charleston  and  New  York  and  will  take  delivery  at  ship's 
tackle  as  fast  as  ship  can  discharge." 

The  owners  of  the  vessel  claimed  that  the  term  free  berth  meant 
that  the  consignee  should  furnish  a  berth  free  of  all  expense  to  the 
ship,  while  the  consignee  claimed  that  it  meant  only  that  he  should 
furnish  an  open  berth  free  of  obstructions,  which  would  be  ready  for 


REPORTS  227 

the  vessel  to  dock  at  immediately  upon  arrival,  and  that  it  is  the 
custom  of  the  ports  both  at  San  Francisco  and  New  York  for  the  ship 
to  pay  dockage  charges. 

Held,  That  the  term  suitable  free  berth  means  a  berth  free  of  obstruc- 
tions and  ready  to  receive  the  vessel  upon  its  arrival  without  delay, 
which  interpretation  of  the  term  free  berth  is  well  known  and  recognized 
by  shipping  interests.  The  vessel  shall  pay  dockage  charges.  (San 
Francisco  Chamber  of  Commerce  Arbitration,  1916). 

When  Consented  to  by  His  Agent,  Shipper  Cannot  Sustain 
Claim  for  Damages  Due  to  Improper  Stowage  of  Tar — Vessel 
Responsible  for  Pilferage,  Short  Delivery  of  Cases,  Packages  or 
Pieces — A  San  Francisco  merchant  chartered  a  steamer  to  a  Pacific 
Coast  merchant  to  carry  6,000  tons  deadweight  cargo  from  Marseilles, 
Genoa,  Gottenberg  and  Antwerp  for  discharge  at  three  Pacific  Coast 
ports,  namely  San  Diego,  San  Pedro  or  within  the  Golden  Gate  at 
San  Francisco  or  Portland,  or  at  a  port  in  Puget  Sound.  The  vessel's 
agent  then  engaged  to  solicit  3,000  tons  of  freight  in  Europe  and  handle 
same  on  joint  account. 

When  the  vessel  arrived  at  San  Francisco  the  charterer  claimed 
that  the  sum  of  $4,751.77  freight  money  had  been  wrongfully  withheld 
by  the  agent  on  account  of  short  delivery  and/or  pilferage  and/or 
breakage  and/or  damage  to  cargo  and  certain  sums  for  commissions 
claimed.  The  charterer  claimed  that  he  was  specifically  exempted  under 
bills  of  lading  for  pilferage  and/or  breakage  and/or  damage  to  cargo. 
At  Gottenberg  a  quantity  of  tar  was  taken  aboard  and  stowed  in  the 
poop,  and  certain  damage  to  the  tar  and  other  cargo  resulted. 

As  to  the  damage  to  the  tar,  the  shipper  maintained  that  it  was 
caused  by  improper  stowage  and  that  the  poop  was  not  a  proper  place  to 
stow  it.    On  this  point  the  arbitrators  said: 

"We  find  that  the  tar  was  stowed  in  the  poop  with  the  consent, 
implied  or  otherwise,  of  the  shipper's  agents,  as  appears  by  the  following 
clause  in  a  letter  dated  at  Gottenburg  January  2,  1912. 

As  regards  the  tar  we  beg  to  say  that  the  only  place  where  same 
could  be  loaded  was  the  poop,  but  in  order  not  to  damage  the  stores 
we  have  been  compelled  to  plaster  all  over  the  bulkheads,  and  we  will 
send  you  an  account  for  the  costs. 

"It  will  be  noted  that  the  agents  apparently  had  full  knowledge 
of  the  storage  in  the  poop  and  further  than  that  they  paid  the  costs 
of  plastering  over  the  bulkheads.  There  can  be  no  doubt  in  the  minds 
of  the  arbitrators  that  they  had  full  knowledge  of  the  stowage  in  the 


228  COMMERCIAL  ARBITRATION 

poop  and  in  order  to  pay  the  costs  of  the  plastering  must  have  con- 
sented to  same.  For  the  above  reasons  we  find  that  the  ship  is  not 
liable  for  damage  to  the  tar." 

There  were  in  addition  ten  specific  claims  for  damage  to  miscel- 
laneous cargo  which  the  arbitrators  decided  in  principle  without  going 
into  the  question  of  actual  money  settlements,  the  arbitrators  stating 
on  this  point: 

"Settlement  of  all  claims  should  be  made  on  the  basis  of  actual 
cost  of  goods,  plus  freight  and  insurance.  The  arbitrators  have  not 
gone  into  the  matter  of  the  amount  of  each  claim  in  dollars  and  cents, 
for  the  reason  that  they  have  been  requested  to  decide  only  on  the, 
principle  and  that  the  parties  would  arrive  at  the  amount  of  each  claim 
and  settlement  of  .same  between  themselves." 

Upon  the  question  of  claims  for  pilferage,  breakage  and  short 
delivery  the  arbitrators 

Held,  That  vessel  is  responsible  for  all  pilferage;  that  vessel  is 
liable  for  all  breakage  claims,  except  for  broken  bottles  and  contents 
of  same.  As  regards  the  marble,  the  same  having  been  improperly 
stowed,  vessel  is  responsible  for  breakage,  that  vessel  is  responsible 
for  short  delivery  of  actual  cases,  packages  or  pieces.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1912). 

Award  As  to  Tar  Modified  on  Appeal — The  question  of  damage, 
to  the  tar  was  appealed  to  the  Appeals  Committee  of  the  San  Francisco 
Chamber  of  Commerce,  and  the  award  of  the  original  arbitrators  was 
modified  to  the  extent  that  the  shipper  and  the  time  charterer  should 
each  pay  one-half  the  actual  cost  of  reconditioning  the  barrels,  and 
one-half  of  any  other  known  loss  through  stowage  of  the  tar.  The 
arbitrators  on  appeal  said: 

"The  shipper  is  the  holder  of  the  bill  of  lading.  Therefore,  no 
innocent  party  is  injured  by  the  omission  on  the  part  of  the  captain 
of  writing  an  annotation  in  the  bill  of  lading  relieving  him  of  his  liability 
for  claims  on  the  tar.  It  is  evident  that  the  time  charterer  and  the 
shippers  knew  that  the  tar  would  be  stowed  in  the  poop  and  both 
knew  the  risk  attached  and  elected  to  take  that  risk  in  preference  to 
the  risk  of  having  to  assume  the  cost  of  forwarding  by  another  vessel 
and/or  claim  for  dead  freight.  For  this  reason  we  decide  that  the  time 
charterer  shall  pay  the  shipper  one-half  the  actual  cost  of  reconditioning 
the  barrels,  and  one-half  of  any  other  known  loss  through  wrongful 
stowage  of  the  tar."  (San  Francisco  Chamber  of  Commerce  Arbitration 
on  Appeal,  1912). 


REPORTS  229 

Vessel  Liable  for  Short  Delivery  of  Nitrate  of  Soda — Per- 
centage of  Shortage — A  Pacific  Coast  importer  shipped  a  cargo 
of  Nitrate  of  Soda  from  Iquique  to  San  Francisco  and  San  Pedro  at 
$17.50  per  long  ton.  The  bill  of  lading  called  for  15,841  bags,  but 
was  indorsed  to  show  that  25  bags  were  lost  overboard  in  loading, 
leaving  15,816  bags  shipped. 

The  shipper  claimed  a  shortage  of  157  bags  at  the  average  gross 
weight  of  203  lbs.  per  bag,  and  demanded  payment  therefor.  The 
vessel  owner  rejected  the  claim  and  asserted  that  the  vessel  delivered 
all  of  the  Nitrate  actually  shipped. 

Held,  That  the  vessel  is  required  to  deliver,  according  to  bills 
of  lading,  15,816  bags  at  an  average  landed  weight  per  bag  of  203  lbs., 
allowing  for  a  shrinkage  of  two  pounds  per  bag,  according  to  Shipper's 
letter  of  December  9,  1920.  The  total  bags  shipped  (15,816)  at  an 
average  weight  of  203  lbs.  per  bag  would  be  3,210,648  lbs. 

The  landed  weight  of  the  nitrate,  as  shown  by  Shipper's  letter 
of  December  8,  1920,  was  3,205,160  lbs.,  which  would  be  a  shortage  of 
5,488  lbs.  or  2.45  tons  of  2,240  lbs. 

5,488  lbs.  at  $3.55  per  100  lbs $194.82 

Less  freight  at  $17.50  per  2,240  lbs 42.88 

Leaving  amount  to  be  paid  by  vessel $151.94 

We  decide  that  Owner  shall  pay  to  Shipper  the  sum  of  $151.94  for 
short  delivery  of  bags  of  nitrate  shipped  per  S.  S.  "Sierra."  (San 
Francisco  Chamber  of  Commerce  Arbitration,    1920). 

Carrier  Responsible  for  Extra  Freight  Charges  When  Cargo 
Under  Contract  is  Shut  Out — Effect  of  Over-Engaging  Vessel — 

A.  a  Pacific  Coast  shipper,  made  a  contract  of  affreightment  with  B, 
another  Pacific  Coast  shipper,  for  a  given  tonnage  of  Copra  to  be 
shipped  in  a  named  vessel.  B  made  a  contract  of  affreightment  with 
A  for  a  given  tonnage  of  Sugar  to  be  shipped  in  another  vessel.  A 
fulfilled  his  contract  with  B  as  to  the  copra  contract.  The  contract 
on  the  sugar  called  for  the  shipment  of  1,875  tons  per  the  "Bayard," 
from  Manila.  The  carrier  shut  out  280  tons  of  the  sugar  at  loading 
port  on  account  of  lack  of  space.  A  thereupon  made  claim  against  B 
for  $1,530,  representing  the  difference  between  the  rate  in  the  affreight- 
ment contract,  and  the  rate  charged  in  shipping  per  another  carrier, 
and  also  made  claim  for  $1,568,  alleging  damage  to  that  amount  for 
the  difference  between  the  sale  price  of  the  original  lot  of  1,875  tons 
and  the  prevailing  price  at  the  time  the  280  tons  shut  out  by  original 
carrier  reached  the  Pacific  Coast  per  the  second  carrier. 


230  COMMERCIAL   ARBITRATION 

Held,  That  as  regards  the  item  of  $1,530  for  difference  in  freight, 
it  is  in  evidence  that  B  over-engaged  the  "Bayard."  Under  the  terms 
of  the  freighting  agreement  for  space  on  the  "Bayard,"  if  the  shippers 
had  not  furnished  the  full  amount  of  1,875  tons  of  sugar,  and  the  space 
had  been  reserved  for  that  quantity  by  the  vessel,  shippers  would h  ave 
had  to  pay  dead  freight  for  non-shipment  of  the  portion  not  furnished 
and  for  which  space  had  been  engaged.  Therefore,  the  shippers,  having 
furnished  the  full  amount  and  B  being  unable  to  receive  it,  the  shippers 
were  thereby  damaged  and  the  burden  of  making  this  damage  good  is 
upon  B. 

"The  allusion  of  B  to  the  fact  that  when  A's  agents  were  asked  which 
he  preferred  to  ship  on  the  "Bayard,"  copra  or  sugar,  in  consequence 
of  the  lack  of  space,  does  not,  in  our  minds,  affect  the  fact  that  B 
through  over-engagement  of  freight,  was  short  on  his  contract  of  space 
to  A.  A's  agents  were  not  obliged  to  declare  which  cargo  should  be 
shut  out,  nor  could  he  instruct  as  to  this,  but  having  been  asked,  gave 
as  his  preference  that  sugar  be  shut  out.  This  does  not  alter  the  situation 
under  the  terms  of  the  contract  of  August  7th. 

"We  decide  that  A  is  entitled  to  the  sum  of  $1,530,  difference  in 
freight  as  claimed  and  that  B  shall  pay  this  as  full  settlement  of  this 
claim. 

"As  regards  the  third  item  claimed,  $1,568.00  for  difference  between 
the  sale  price  of  the  280  tons  sugar  and  the  selling  price  on  November 
2,  1917,  we  disallow  this  claim  as  being  consequential  damages  which 
do  not  enter  into  this  and  the  agent  chose  to  shut  out  the  sugar." 
(San  Francisco  Chamber  of  Commerce  Arbitration,  1918). 

Shipping  Instructions,  When  Part  of  Confirmation,  Control 
Shipment  of  Barley — Damages  for  Non-Compliance — A  sold  to  B 
750  tons  of  Barley  delivered  on  railroad  track  Los  Angeles.  In  con- 
firming the  purchase,  under  date  of  July  30,  1913,  Buyer  added  the 
following  clause:  Unless  otherwise  specified  ship  this  barley  to  us  at 
Los  Angeles  via  Port  San  Luis  and  San  Pedro.  On  August  9th,  in 
response  to  a  request  from  Buyer  for  a  confirmation  of  sale,  Seller 
telegraphed  Buyer  as  follows: 

We  confirm  sale  to  you  through  broker  750  tons  quality 
equal  sample  09.     August  shipment.     We  hold  your  confirma- 
tion these  purchases.     Thought  this  was  sufficient. 
On  August  19th,  Buyer  telegraphed  Seller: 

Do  not  fail  to  ship  Santa  Maria  lots  via  rail  and  water  as 
per  our  formal  advices.  Arrange  with  steamship  company 
and  notify  us  before  arrival.     Have  to  divert. 


REPORTS  231 

Seller  refused  to  ship  the  barley  by  water  on  the  ground  that  he 
was  not  obligated  to  do  so,  and  shipped  by  rail  to  Los  Angeles.  Buyer 
accepted  and  paid  for  the  barley  on  arrival,  but  claimed  that  as  he  had 
resold  it  at  a  point  other  than  Los  Angeles,  namely  Compton,  and  if  it 
had  been  shipped  by  water  as  ordered  by  Buyer,  he  would  have  effected 
a  saving  of  50  cents  per  ton,  on  400  tons  resold  to  Compton,  which  he 
demanded  as  damages. 

Held,  That  the  acceptance  by  Seller  of  Buyer's  confirmation  in- 
cluded an  acceptance  of  all  the  terms  set  forth  in  said  confirmation, 
and  therefore  Seller  was  obligated  to  ship  the  barley  to  Los  Angeles, 
via  Port  San  Luis  and  San  Pedro,  unless  otherwise  specified.  Accord- 
ingly Buyer's  claim  for  50  cents  a  ton  on  400  tons  received  by  rail  and 
subsequently  shipped  to  Compton  at  an  additional  freight  paid  by 
Buyer  is  allowed.  (San  Francisco  Chamber  of  Commerce  Arbitra- 
tion,  1913). 

Seller  Not  Entitled  to  Interest  on  Deferred  Delivery  of  Barley, 
Due  to  Buyer's  Objection  to  Quality — A  sold  to  B  2,500  tons 
Standard  Choice  Brewing  Barley,  F.  O.  B.  vessel  Port  Costa,  Cali- 
fornia. The  contracts  contained  this  clause:  Storage  after  December 
31st,  fifteen  cents  per  ton  per  month.  It  was  also  specified  that  Chamber 
of  Commerce  certificates  of  weight  and  quality  were  to  be  furnished. 

Buyer  did  not  send  a  steamer  to  take  delivery  of  this  Barley  until 
January  5th,  at  which  date  the  "Achlibster"  arrived  at  the  dock. 
This  steamer  took  delivery  of  about  1,200  tons  when  Buyer  raised 
objections  to  the  quality,  and  the  steamer  knocked  off. 

Pending  the  arbitration,  Buyer  removed  the  " Achlibster"  and 
substituted  the  "Picton"  to  take  the  balance  of  the  delivery,  and  wrote 
Seller  on  January  7th  accordingly  advising  that  the  "Picton"  would 
be  at  the  warehouse  on  or  about  January  12th,  to  which  Seller  agreed. 
Seller  claimed  that  he  was,  on  January  12th,  and  at  all  times  subsequent 
thereto,  ready  to  deliver  this  barley,  but  heard  nothing  further  of  the 
matter  until  January  15th,  when  Buyer  advised  that  the  "Picton" 
would  be  at  the  dock  on  January  21st  to  take  delivery  of  the  balance 
of  the  shipment.  In  reply  to  same  Seller  immediately  advised  that 
under  date  of  January  16th  that  he  had  a  berth  for  this  steamer  ar- 
ranged, but  would  be  obliged  to  charge  interest  on  the  amount  involved 
from  that  date  until  time  of  delivery  and  that  in  accordance  with 
contract  there  would  also  be  a  charge  of  15c  per  ton  for  storage. 


232  COMMERCIAL   ARBITRATION 

In  his  submission  to  arbitration,  Seller  said: 

"Had  Buyer  taken  delivery  of  the  barley  as  per  contract  on  the 
'Achlibster'  which  he  should  have  done,  this  contract  would  have  been 
completed  on  January  8th  and  the  matter  closed,  but  owing  to  his 
unwarranted  objections  to  the  certificates  being  issued  and  the  con- 
sequent stoppage  of  delivery,  the  contract  was  not  completed  until 
January  26th,  so  that  in  reality  we  are  entitled  to  interest  on  the 
undelivered  portion  between  these  dates  but  this  we  have  not  claimed. 
As  regards  storage,  there  can  be  no  question  as  the  contracts  clearly 
state  storage  after  December  31st  15c  per  ton  per  month." 

It  was  in  evidence  that  no  warehouse  receipt  had  been  tendered, 
and  the  Buyer  claimed  that  no  interest  or  storage  could  be  charged 
until  tendered  and  that  no  tender  had  been  made  until  the  barley 
was  aboard  ship. 

Held,  That  Seller  is  entitled  to  the  charge  as  made  for  storage 
on  about  1,200  tons  of  Barley  at  15c  per  ton.  That  Seller  is  not  entitled 
to  anything  for  interest  as  per  charge  made  by  him  from  the  12th  to 
the  26th  of  January.  (San  Francisco  Chamber  of  Commerce  Arbi- 
tration, 1915). 


REPORTS  233 


Steel  Bars 


Buyer  Not  Justified  in  Reselling  To  Establish  Loss  for 
Variation  in  Delivery  Short  Length  Steel  Bars  Without  Notice 
to  Seller  —  Custom  of  Trade  —  Non-Fulfillment  of  Contract 
Specifications  —  An  American  exporter  sold  to  a  merchant  in 
Japan  certain  quantities  of  Mild  Steel  Bars  of  various  sizes  from  % 
inch  to  %  inch,  specifying  in  bundles  12  feet  in  length.  When 
the  bars  were  received  in  Yokohama,  Buyer  claimed  that  they 
were  not  all  in  12  foot  lengths  but  that  a  large  quantity  were 
in  13  foot  to  16  foot  lengths  and  a  certain  quantity  were  9  feet  to  10 
feet  in  length,  and  that  as  these  were  not  desirable  in  that  market  he 
had  been  obliged  to  sell  them  at  prices  which  resulted  in  a  loss.  Buyer 
made  claim  on  Seller  for  his  loss  on  sale  of  said  bars,  amounting  to  a 
total  of  Yen  13,480.79,  this  amount  being  the  difference  between  the 
prices  at  which  the  Buyer  had  originally  contracted  to  sell  the  bars  to 
his  purchaser,  and  the  prices  obtained  by  him  on  the  resale  of  the 
bars  in  different  lots  at  different  times.  Seller  rejected  the  claim  on 
the  grounds  that  this  act  was  not  justifiable  and  arbitrary.  Seller 
claimed  that  if  Buyer  had  cabled  him  on  arrival  of  the  goods  that  he 
could  not  use  those  portions  not  12  feet  in  length,  Seller  could  have 
turned  those  bars  over  to  other  firms  in  Yokohama  or  Tokyo,  who 
would  have  taken  them  at  even  higher  figures. 

After  having  made  an  independent  investigation  of  the  market  for 
Mild  Steel  Bars  in  Japan,  the  trade  custom  in  regard  to  shipping 
specifies  lengths  of  these  bars  when  so  ordered  by  Buyer  in  Japan, 
and  also  making  inquiry  as  to  the  proportionate  value  of  bars  of 
different  lengths  and  also  in  short  pieces,  the  arbitrators 

Held,  That  Seller  did  not  fulfill  the  conditions  of  the  contract  and 
make  a  good  delivery  of  the  merchandise  in  question.  We  find  upon 
independent  investigation,  among  many  prominent  exporters  and  manu- 
facturers of  Mild  Steel  Bars  for  the  Japanese  market,  that  when  they 
receive  orders  from  Japan  for  these  bars  in  sizes  z/%  inch,  Y%  inch,  h/%  inch 
in  12  foot  lengths,  which  is  customary  in  Japan,  they  consider  them- 
selves obligated  to  furnish  only  12  foot  lengths,  except  that  a  variation 
of  from  Y%  inch  to  %  mch  in  cutting  is  considered  permissible. 

We,  therefore,  find  that  Buyer,  not  having  received  shipment  in 
full  as  ordered,  is  entitled  to  such  actual  damages  as  he  may  have 
sustained  from  the  wrong  delivery  of  a  portion  thereof. 


234  COMMERCIAL   ARBITRATION 

We  cannot  agree,  however,  if  Buyer,  instead  of  notifying  Seller  that 
goods  were  not  in  accordance  with  contract  and  asking  for  disposition 
of  same  and  thus  giving  Seller  the  alternative  of  taking  the  bars  off 
Buyer's  hands,  proceeded  to  sell  the  bars  at  reduced  prices,  that  the 
difference  in  prices  at  which  they  were  sold  and  the  prices  at  which 
Buyer  originally  contracted  to  sell  them,  constitute  the  measure  of 
damages.  We  decide  that  the  real  measure  of  damages  is  the  actual 
difference  in  the  value  of  the  bars  delivered  and  the  bars  ordered.  We 
find  that  the  greater  portion  of  the  bars  over  12  feet  in  length  could 
have  been  used  by  cutting  them  down  to  12  foot  lengths  and  applying 
these  12  foot  lengths  on  Buyer's  contracts,  and  that  Buyer's  actual 
loss  would  then  have  been  as  follows: 

(a)  Cost  of  cutting  excess  lengths  to  12  feet  lengths  and 
repacking  same. 

(b)  Difference  in  value  of  the  short  cut  off  pieces  as  compared 
with  their  equal  weight  in  12  foot  lengths. 

(c)  The  value  of  the  9  and  10  foot  lengths  as  compared  to  12 
foot  lengths. 

We  fix  said  loss  as  follows: 

(a)  There  were  approximately  377,610  lbs.  of  Bars 
over  12  feet  in  length.  By  reducing  these  Bars  to 
12  feet  in  length,  a  loss  in  weight  amounting  to 
72,051  lbs.  would  have  occurred,  but  the  remaining 
305,559  lbs.  of  Bars  would  then  have  met  the  exact 
specifications  and  could  have  been  applied  on  Buyer's 
contracts.  We  find  that  the  cost  of  cutting  off  and 
repacking  these  Bars  in  12  foot  lengths  would  amount 
approximately  to $    337.20 

(b)  We  find  that  the  value  of  the  short  cut  off  pieces, 
per  ton,  obtained  by  the  above  process,  would  be 
20  per  cent  of  the  original  invoiced  value  and,  there- 
fore, there  was  a  loss  of  80  per  cent  of  the  invoiced 
value  of  these  short  pieces,  the  weight  of  the  short 
pieces  amounting  to  72,051  lbs.     The  loss  on  this 

item  would  be 4,107.04 

(c)  In  view  of  the  evidence  submitted,  we  allow  Buyer 
the  difference  between  the  resale  price  of  the  9  and 
10  foot  lengths,  Yen  5668.96  or  $2,834.48,  and  the 
invoice  price  of  these  Bars,  $3,365.85  as  his  loss  net 

on  these  goods,  which  is 531.37 

Total. $4,975.61 


REPORTS  235 

We  decide  that  Buyer  is  entitled  to  a  refund  from  Seller  of  $4,975.61 
and  that  Seller  shall  pay  to  Buyer  that  sum  as  full  settlement  for  non- 
fulfillment of  the  contracts  and  all  claims  in  this  case. 

We  do  not  allow  Buyer  any  profit  on  the  cut  off  pieces  or  on  the 
9  and  10  foot  lengths  as  we  consider  Buyer  should  have  given  Seller 
notice  by  cable,  before  selling  the  bars,  that  the  goods  were  not  in 
accordance  with  contract  and  asked  for  disposition  of  same,  and  thus 
have  given  Seller  an  alternative  for  disposal  of  the  goods.  (San  Fran- 
cisco Chamber  of  Commerce  Arbitration,  1920.) 

Award  Modified  on  Appeal — The  Seller  appealed  from  the  fore- 
going award,  the  arbitrators  on  appeal  saying: 

First — We  confirm  the  decision  of  the  Arbitration  Committee  that 
Seller  did  not  fulfill  the  conditions  of  the  contract  and  make  a  good 
delivery  in  full. 

Second — We  agree  with  the  principle  applied  by  the  Committee 
in  arriving  at  a  basis  for  determining  damages. 

Third — We  confirm  the  allowance  awarded  by  the  Committee  in 
item  (a)  of  $337.20,  as  estimated  cost  of  reducing  over-length  Bars  to 
12  foot  lengths. 

Fourth — We  confirm  the  allowance  awarded  by  the  Committee,  in 
item  (c)  of  $531.37  for  difference  in  value  of  9  and  10  foot  length  Bars. 

Fifth — We  do  not  agree  with  the  award  of  the  Committee  in  item 
(b)  of  $4,107.04,  as  Buyer's  loss  on  the  short  pieces,  if  cut  off  the  over- 
length  bars,  as  it  is  clear  from  the  records  that  the  Committee  estimated 
the  value  of  these  pieces  simply  as  scrap,  while  we  find  from  our  inves- 
tigations that  they  have  a  greater  value  in  Japan  than  scrap  value. 
We  have  exhaustively  gone  into  the  use  and  value  in  Japan  of  such 
short  pieces  of  Mild  Steel  Bars,  or  "Crops"  as  they  are  designated,  and 
find  that  there  are  a  variety  of  uses  to  which  they  are  put  there,  and 
that  such  "Crops"  were  being  imported  into  Japan  in  considerable 
quantities  in  1917  at  higher  prices  than  that  fixed  in  the  Arbitration 
Committee's  award. 

We,  therefore,  reverse  the  award  of  the  Arbitration  Committee  for 
item  (b)  and  from  inspection  by  us  of  invoice  of  steel  companies  of 
shipments  of  "Crops"  to  Japan  in  the  summer  of  1917,  we  fix  the  fair 
value  of  the  short  pieces  in  question  at  sixty  per  cent  of  the  invoice 
value  of  12  foot  Bars  and  we  decide  that  Seller  shall  allow  Buyer  the 
difference  between  that  value  and  the  invoice  value  of  the  72,051  lbs. 
of  short  pieces  in  question,  amounting  to  $2,053.52. 


236  COMMERCIAL   ARBITRATION 

Summing  up,  we  decide  that  Seller  shall  allow  Buyer  as  follows: 

(a)  Estimated  cost  of  reducing  Bars  to  12  feet $    337.20 

(b)  Estimated  loss  of  40  per  cent  on  invoice  price  of 
weight  of  short  pieces $2,053.52 

(c)  Loss  on  sale  of  9  and  10  foot  bars 531.37 

Total  allowance  awarded  Buyer $2,922.09 

And  we  decide  that  said  allowances,  when  made,  shall  constitute 
full  settlement  of  this  case.  (San  Francisco  Chamber  of  Commerce 
Arbitration,  1920.) 


REPORTS  237 


Tank  Cars 

Failure  to  Have  Buyer's  Tank  Cars  Ready  for  Vegetable 
Oil — 30  Days'  Notice  of  Vessel's  Arrival — Advice  to  Broker — In 

April,  1919,  a  Pacific  Coast  importer  sold  an  Eastern  Manufacturer 
about  100  long  tons  of  Chinese  Peanut  Oil,  duty  paid,  F.  O.  B.  Buyer's 
tank  cars,  Seattle,  Wash.,  Transcontinental  Freight  Bureau  weights  to 
govern  as  to  quantity  delivered  to  cars.  Shipment  was  to  be  by  steamer 
from  the  Orient  during  April-May,  1919. 

Seller  was  to  give  Buyer  about  30  days'  notice  prior  to  anticipated 
arrival  of  the  shipment  at  Seattle,  and  Buyer  was  to  have  tank  cars 
in  sufficient  capacity  to  hold  the  full  amount  of  oil  covered  by  the  con- 
tract, and  any  expense  accruing  by  reason  of  Buyer's  delay  in  furnishing 
tank  cars  was  to  be  for  Buyer's  account.  April  29,  1919,  Seller  advised 
a  Chicago  broker,  who  negotiated  the  sale,  that  the  vessel  on  which  the 
oil  was  shipped  was  due  at  Seattle  June  2nd,  and  directing  the  broker 
to  arrange  to  have  tank  cars  at  that  port  in  time  to  discharge  this 
cargo.  The  broker  so  notified  the  Buyer  on  May  3rd.  The  vessel  did 
arrive  at  Seattle  June  2nd,  as  scheduled,  and  the  Oil  was  transferred 
to  a  lighter  on  June  4th,  the  mate's  receipt  bearing  the  following 
notation : 

"Four  (4)  barrels  empty  from  ship,  fifteen  (15)  leakers 
dumped  into  other  barrels.     Oil  in  leaky  condition  from  ship." 

The  oil  arrived  at  Drummond  Lighterage  Company's  plant  June 
4th  for  loading  into  tank  cars,  which  were  not  available  for  loading, 
although  Buyer  advised  that  the  tanks  were  en  route.  Tank  cars  not 
having  arrived,  the  oil  was  kept  on  the  lighter  pending  their  arrival. 
The  record  thereafter  shows:  That  on  June  9th  two  tank  cars  were 
assigned  and  oil  was  landed  on  dock  and  weighed  June  10th. 

That  Drummond  Lighterage  Company  ordered  these  two  cars 
on  June  9th  to  be  spotted  at  their  plant  and  one  was  so  spotted  on 
June  10th  and  the  other  not  until  June  17th  and  one  car  had  to  be 
cleaned  causing  a  loss  of  one  day  in  loading. 

That  the  third  car  was  not  assigned  until  June  12th  and  was  spotted 
on  June  13th  and  loaded  June  14th. 

That  Seller  claimed  as  charges  accruing  through  Buyer  not  furnishing 
tank  cars  on  June  5th,  when  oil  was  at  dock  ready  to  load  into  cars, 
the  sum  of  $924.41,  which  should  be  $829.62,  on  account  of  error  in 
calculating  interest,  which  is  admitted  by  Seller. 


238  COMMERCIAL   ARBITRATION 

That  besides  cost  of  interest,  insurance  and  telegrams,  Seller  claimed 
an  allowance  of  $655.52  for  loss  on  4162  lbs.  of  oil  lost,  due  to  Buyer's 
delay  in  furnishing  cars,  this  amount  being  the  difference  between 
weigher's  net  weights  on  dock  and  tank  car  weights  when  loaded 
into  cars. 

That  Buyer  denies  any  liability  and  asks  to  be  reimbursed  for  the 
entire  amount  of  $924.41,  which  Buyer  had  paid  under  protest  pending 
adjustment  of  the  claim,  with  interest  at  6  per  cent  from  July  7,  1919. 

Held,  First — That  Seller's  claim  as  to  error  in  weigher's  Mark 
Gross  is  correct,  as  we  find  that  only  Mark  Gross  for  the  original  28 
barrels  on  Sheet  No.  8  is  included  in  the  total  Mark  Gross  by  weigher 
and  5136  lbs.  Mark  Gross  of  empty  12  barrels  originally  shipped  from 
Orient  as  shown  on  weigher's  Sheet  No.  9  should  be  added,  which 
would  make  total  Mark  Gross,  according  to  weigher's  summary,  to 
be  263,422  lbs.  With  this  correction  the  difference  between  weigher's 
weights  and  the  Shanghai  weights  is  slight,  being  only  7  lbs.  on  net 
weights,  and  we  accept  weigher's  weights  as  official. 

Second — That  proper  notice  of  "about  30  days"  was  given  by 
Seller  to  Buyer  of  the  expected  time  of  arrival  of  vessel  as  Buyer's 
Broker  was  notified  by  wire  on  April  29th  and  he  notified  Buyer  by 
letter  on  May  3rd.  Therefore,  even  if  Buyer  did  not  receive  this  letter 
until  May  4th  that  would  have  been  29  days'  notice,  and  from  his  letter 
to  his  Seattle  representative,  dated  May  2nd,  advising  him  of  the 
expected  arrival  of  the  Oil,  it  is  possible  Buyer  received  verbal  or  other 
notice  prior  even  to  May  2nd. 

Third — That  Buyer  was  in  default  in  not  furnishing  and  tendering 
tank  cars  for  the  oil  in  question  by  June  5th  when  the  oil  was  ready 
for  discharge  at  Drummond  Plant,  and  we  decide  that  the  date  of  notice 
to  Drummond  Lighterage  Co.  of  assignment  of  designated  cars  is  the 
time  of  delivery  of  said  cars  by  Buyer,  but  that  time  lost  in  cleaning 
any  cars,  after  being  spotted  at  the  plant,  shall  be  for  Buyer's  account. 

Fourth — We  disallow  Seller's  supplementary  cliam  for  any  estimated 
loss  of  oil  while  on  lighter  from  June  5th  to  June  10th  in  view  of  the 
fact  that  many  barrels  were  in  bad  condition  when  discharged  from 
steamer,  and  Seller  should  have  landed,  recoopered  and  weighed  the 
barrels  on  June  5th  in  order  to  minimize  damages. 

Fifth — We  find  that  Seller  is  entitled  to  a  reasonable  amount  for 
oil  actually  lost  between  the  time  it  was  landed  on  dock  and  weighed 
and  the  time  final  tank  cars  were  assigned,  due  to  the  delay  by  Buyer 
in  furnishing  cars,  which  amount  we  fix  as  follows: 


REPORTS  239 

Net   weight   when   weighed    on   dock,    no    allowance 

having  been  made  for  soakage  in  transit 210,582  lbs. 

Net  weight  when  loaded  into  cars 206,420  lbs. 

Difference 4,162  lbs. 

From  which  we  allow  following  deductions : 

(a)  Soakage  in  transit,  for  which  we  allow 

4  lbs.  per  barrel  on  598  bbls 2392  lbs. 

(b)  Net  weight  of  2  barrels  not  loaded 726  lbs. 

(c)  Loss  in  dumping  Oil,   for  which   we 
allow  y8  of  1  per  cent  on  210,582— 

726  =  209,856  lbs 263  lbs. 

Total  deductions 3,381  lbs. 

Amount  of  Oil  lost 781  lbs. 

We  decide  that  Seller  is  entitled  to  an  allowance  by  Buyer  for  loss 
of  781  lbs.  of  Oil,  through  Buyer's  delay  in  furnishing  cars  on  time, 
at  15M  cents  per  lb $123.01 

Sixth — We  allow  Seller  $37.94  interest  for  7  days  from  June  5th 
to  June  12th,  the  date  of  tender  of  third  car,  as  Seller  was  entitled  to 
invoice  the  entire  shipment  at  same  time,  but  we  disallow  interest  from 
June  12th  to  June  17th  as  we  find  that  time  of  spotting  cars  and  loading 
is  for  Seller's  account  and  any  delay  in  spotting  cars,  after  being  ordered 
by  Drummond  Lighterage  Co.,  is  a  matter  between  Seller  and  Railroad 
Company. 

Seventh — We  allow  Seller  fire  insurance  as  claimed  on  Oil  while  at 
Drummond  Plant $21.52 

Eighth — We  disallow  Seller's  claim  for  $68.00  marine  insurance  on 
Oil  while  on  lighter  as  original  insurance  from  Shanghai  covered  the 
Oil  until  landed  at  Seattle  and  this  second  policy  was  duplicate  insurance 
and  unnecessary. 

Ninth — We  disallow  Seller's  claim  for  salary  and  expenses  of  an 
employee  while  at  Seattle  as  he  was  in  Seller's  regular  employ  and  his 
presence  in  Seattle  was  optional  with  Seller,  who  had  engaged  Drum- 
mond Lighterage  Co.  to  handle  the  Oil  from  steamer  to  tank  cars. 

Tenth — We  disallow  Seller's  claim  for  expense  of  telegrams  and 
telephone  messages  as  we  consider  these  were  for  the  mutual  interest 
of  both  parties. 


240  COMMERCIAL   ARBITRATION 

Summing  up  the  above  findings  we  make  the  following  award  on 
Seller's  claims: 

We  award  to  Seller 

(a)  Loss  on  781  lbs.  Oil  at  .15%<5  per  lb $123.01 

(b)  Interest  as  claimed  for  7  days m 37.94 

(c)  Fire  insurance  as  claimed 21.52 

Total  award  to  Seller $182.47 

We  disallow  seller's  claims  for 

(a)  Marine  Insurance $68.00 

(b)  Representative's  salary  and  expenses 54.60 

(c)  Telegraph  and  telephone  messages 19.56 

Total $142.16 

And  we  decide  that  out  of  the  $924.41  paid  by  Buyer  to  Seller  under 
protest  for  Seller's  claim  as  originally  made,  and  before  errors  therein 
were  corrected,  Seller  shall  refund  to  Buyer  the  difference  between 
said  $924.41  and  $182.47  awarded  Seller,  amounting  to  $741.94,  with 
interest  thereon  at  6  per  cent  from  July  7,  1919,  the  date  Seller's  draft 
was  paid,  to  date  refund  is  made,  and  that  such  payment,  when  made, 
shall  constitute  full  settlement  of  all  claims  in  this  case.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1921.) 

Affirmed  on  Appeal — The  Seller  appealed  the  foregoing,  alleging 
error  on  the  part  of  the  original  arbitrators.  The  Appeals  Committee 
sustained  the  original  award  without  comment.  (San  Francisco 
Chamber  of  Commerce  Arbitration,  1921.) 


REPORTS  241 


Tend 


enaer 

Must  Act  Upon  Tender  Within  48  Hours — The  general  rule  is 
that  a  tender,  or  delivery  of  sample  to  Buyer's  agent  at  point  of  tender, 
on  sales  between  parties  located  in  the  United  States  and/or  Canada, 
if  made  between  9  a.  m.  and  5  p.  m.,  and  between  9  a.  m.  and  12  noon 
Saturdays  (Sundays  and  holidays  excepted)  shall  constitute  delivery 
unless  rejected  within  48  hours  from  tender  or  delivery  to  Buyer's 
agent.    (Foreign  Commerce  Association  Rule  No.  33). 

Upon  acceptance  of  rejection  it  is  the  rule  that  Seller  shall  have 
the  right  of  other  tenders  provided  same  are  made  within  contract 
time. 

When  a  rejection  of  Vegetable  Oil  is  left  uncontested  by  the  Seller 
or  is  sustained  as  a  result  of  arbitration,  Seller  shall  have  the  original 
contract  period  within  which  to  tender  other  lots.  (Foreign  Commerce 
Association  Rule  272). 

Failure  to  reject  a  tender  of  Vegetable  Oil  within  48  hours  after 
sampling  (Saturdays,  Sundays  and  holidays  excepted),  shall  constitute 
an  acceptance  of  tender  by  Buyer,  except  that  when  tenders  are  made 
at  points  where  no  licensed  inspector  and  chemist  of  the  Foreign  Com- 
merce Association,  New  York  Produce  Exchange  or  Interstate  Cotton- 
seed Crusher's  Association  (according  to  the  contract  used)  are  located, 
Buyer  cannot  be  held  to  the  foregoing  time  allowance,  but  must  be 
given  an  opportunity  to  verify  quality  by  promptest  available  other 
means.    (Foreign  Commerce  Association  Rule  No.  276). 

A  contract  covering  Vegetable  Oil,  June  shipment  from  Pacific 
Coast,  delivery  of  two  tanks  subsequent  to  June  was  held  valid,  time 
of  shipment  and  not  time  of  tender  being  the  essence  of  the  contract. 
(Foreign  Commerce  Association  Arbitration  No.  23,  1920,  Page   194). 

Seller,  having  defaulted  in  making  immediate  shipment  of  Beans, 
he  was  held  to  have  forfeited  the  right  of  a  second  tender  after  the 
expiration  of  the  immediate  shipping  period.  (California  Bean  Dealers 
Association  Arbitration  No.  19,  1918,  Page  33). 

The  tender  of  a  sampling  permit  allowing  the  drawing  of  a  five  pound 
sample  of  Manchurian  Walnuts  in  bonded  warehouse  from  1,000 
bags  of  Manchurian  Walnuts  was  held  not  to  be  a  valid  tender  under  a 
contract  specifying  duty  paid  ex  dock  San  Francisco,  and  Buyer's 
rejection  was  sustained.  (Foreign  Commerce  Association  Arbitration 
No.  44,  1922,  Page  243). 


242  COMMERCIAL   ARBITRATION 

A  Buyer  who  rejects  a  tender  of  Manchurian  Walnuts  on  the 
ground  that  they  do  not  comply  with  contract  specifications  cannot 
insist  upon  another  tender  under  a  contract  containing  a  clause  that 
" Rejection  constitutes  deliver' '  (Rule  15  of  the  Foreign  Commerce 
Association)  and  Seller  is  relieved  from  all  obligation  of  fulfilling 
contract.  (Foreign  Commerce  Association  Arbitration  No.  35,  1921,  and 
No.  35-A,  1921,  Page  156.    See  also  Dissenting  Opinion,  Page  158). 

A  second  tender,  as  permitted  under  Rule  15  of  the  Foreign  Com- 
merce Association,  must  be  noticed  by  the  Seller  to  the  Buyer  if  Seller 
is  to  preserve  his  rights  of  retender,  it  being  held  that  Rule  15,  per- 
mitting retenders  during  the  life  of  a  contract,  allows  an  option  entirely 
in  Seller's  favor  and  to  Buyer's  detriment.  A  delay  of  eleven  days  was 
held  to  be  unreasonable  and  to  have  deprived  the  Seller  of  his  right  to 
retender.  (Foreign  Commerce  Association  Arbitration  No.  44,  1922, 
Page  243). 

Under  a  sale  and  purchase  of  "spot"  goods,  Buyer  cannot  sustain 
a  rejection  of  Beans  on  the  ground  of  undue  delay  without  first  having 
demanded  a  tender.  (San  Francisco  Chamber  of  Commerce  Arbitration, 
1919,  Page  252). 

When  Buyer  stipulates  that  tender  of  Peanut  Oil  shall  be  made  to  a 
designated  agent,  rejection  of  shipment  made  without  such  tender  to 
the  agent  was  sustained.  (Foreign  Commerce  Association  Arbitration 
No.  23,  1920,  Page  250). 

Where  a  contract  covering  Kotenashi  Beans  contains  the  clause 
Rejection  made  by  Buyer  and  accepted  by  Seller  constitutes  delivery,  and 
where  it  is  specifically  stated  that  Seller  is  not  bound  by  any  agreement 
or  understanding  other  than  that  embodied  in  the  contract,  rejection 
of  beans  that  do  not  conform  to  contract,  when  accepted  by  Seller, 
precludes  a  new  tender  by  Seller,  and  trade  custom  may  not  be  set  up 
under  the  limitation  in  the  contract  itself  as  to  any  agreement  or 
understanding  not  embodied  in  the  contract.  (California  Bean  Dealers 
Association  Arbitration  No.  12,  1920,  Page  250). 

A  tender  of  Rice  made  by  mistake  may  be  withdrawn,  and  such 
withdrawal  is  not  an  acceptance  of  rejection.  (San  Francisco  Chamber 
of  Commerce  Arbitration,  1919,  Page  247). 

Where  under  an  October  delivery  contract  Buyer  requests  delay 
as  to  acceptance  or  rejection  of  Prunes  until  November  and  in  Novem- 
ber rejects  outright,  Seller  has  the  right  of  a  new  tender.  (Dried  Fruit 
Association  of  California  Arbitration,  No.  25,  1917,  Page  250). 


REPORTS  243 

When  under  a  contract  Seller  is  obligated  to  make  a  second  tender 
of  Manchurian  Walnuts,  it  stands  to  reason  that  he  must  have  the 
unexpired  portion  of  the  contract  period  in  which  to  do  so.  And  if, 
for  cause,  said  second  tender  were  rejected  and  the  contract  were  still 
alive,  Seller  would  still  be  bound  to  make  even  a  third  tender.  (Private 
Arbitration  at  San  Francisco,  1922,  Page  245). 

Sampling  Permit  on  Bonded  Warehouse  Not  a  Valid  Tender 
of  Goods  Sold  Ex  Dock,  Duty  Paid — Right  of  Second  Tender — 
Seller's  Option  Must  Be  Elected  Promptly  and  Formally  to 
Keep  it  Alive — A  San  Francisco  merchant  sold  to  a  merchant  in  the 
same  city  fifty  tons  of  Manchurian  Walnuts,  bleached  l}/g  inch  in 
diameter  or  larger,  guaranteed  to  crack  not  less  than  90  per  cent  sound 
sweet  meats,  October-November  (1921)  shipment  from  the  Orient, 
ex  Dock,  San  Francisco,  duty  paid,  Buyer's  inspection,  certificate  of 
Foreign  Commerce  Association  to  be  final.  Prior  to  arrival  of  the  nuts, 
Seller  declared  the  shipment  per  the  S.  S.  "Azumasan  Mam." 

The  goods  were  tendered  to  Buyer  January  5,  1922,  and  rejected 
on  the  same  day  on  account  of  the  good  crack  falling  below  the  guar- 
anteed 90  per  cent.  On  January  17th,  Seller  accepted  Buyer's  rejection 
of  the  first  lot,  and  claiming  the  right  to  retender  under  Rule  15  of  the 
Foreign  Commerce  Association  of  the  Pacific  Coast,  Uniform  Contract, 
presented  to  Buyer  a  sampling  permit,  allowing  the  Buyer  to  sample 
and  inspect  the  walnuts  in  bond.  The  sampling  permit  called  for  five 
pounds  of  walnuts.  The  Buyer  refused  the  sampling  permit  and  con- 
tended that  the  Seller  had  no  right  to  make  a  second  tender,  since  it 
had  been  stated  verbally  by  the  Seller  that  if  his  supplier  did  not  insist 
upon  making  a  new  tender,  Seller  would  not  do  so.  Buyer  further 
contended  that  eleven  days  was  an  unreasonable  delay  in  making  or 
signifying  Seller's  intention  to  make,  a  second  tender.  A  further  claim 
was  made  by  Buyer  that  the  Seller  had  not  been  required  to  accept 
a  new  tender  from  his  supplier  but  on  the  contrary  had  received  a  cash 
settlement  on  account  of  breach  of  contract. 

The  record  showed  that  when  the  first  tender  was  made,  Seller  did 
not  present  certificate  of  the  Foreign  Commerce  Association  as  to 
quality.  Buyer  rejected,  and  Seller  in  writing  refused  to  allow  the 
rejection,  but  Seller  admitted  in  his  brief  that  inspection  bj'  the  Foreign 
Commerce  Association  showed  the  quality  not  to  be  in  accordance 
with  contract,  and  that  he  verbally  withdrew  his  protest  against  the 
rejection. 


244  COMMERCIAL   ARBITRATION 

The  arbitrators,  in  their  findings,  said: 

"Under  Rule  15,  in  the  event  of  rejection,  accepted  by  Seller,  the 
Seller  has  the  privilege  of  replacing  within  the  contract  time.  This 
being  an  option  entirely  in  Seller's  favor  and  to  Buyer's  detriment, 
Seller  must  promptly  take  the  ordinary  commercial  steps  to  preserve 
his  rights  and  it  is  to  be  presumed  that  if  under  this  rule  he  intends  to 
exercise  his  option,  he  is  to  give  Buyer  proper  notice,  otherwise  Seller's 
option  lapses.  No  such  notice  was  given  in  this  case  unless  we  can 
consider  that  such  notice  was  given  in  conversations  between  Seller 
and  Buyer,  to  the  effect  that  if  Seller's  supplier  made  another  tender, 
then  Seller  would  also  retender  to  his  Buyer. 

"Seller's  rights  under  Rule  15  are  different  from  Seller's  rights  under 
a  contract  putting  upon  Seller  a  definite  obligation  to  make  another 
tender.  Where  the  obligation  is  definitely  upon  Seller,  then  there  is 
no  need  to  give  formal  notice  in  advance  of  the  retender.  Where  the 
retender  is  entirely  at  Seller's  option,  arbitrators  feel  that  Seller,  in 
order  to  avail  himself  of  said  option,  must  do  so  formally,  and  within 
a  reasonable  time  and,  accordingly,  find  that  Seller  did  not  keep  alive 
his  option  of  retendering. 

"Further,  Seller's  so-called  second  tender  is  really  not  a  tender  at 
all.  Under  this  contract,  to  make  a  tender,  Seller  must  present  Buyer 
with  certificate  of  Foreign  Commerce  Association  as  to  quality,  together 
with  delivery  order  on  dock,  calling  for  the  delivery  of  walnuts  on 
which  duty  has  been  paid.  All  that  Seller  tendered  to  Buyer  was  a 
sampling  permit  for  five  pounds  (say  150  to  200  nuts),  which,  by  the 
way,  is  an  entirely  inadequate  sample  to  represent  1,000  bags. 

"Had  Seller  definitely  declared  to  Buyer  his  intention  of  making 
a  second  tender,  promptly  after  the  first  tender  was  rejected,  then 
he  would  have  had  under  Rule  15  the  entire  life  of  the  contract  in  which 
to  make  the  second  tender,  i.  e.  the  time  within  which  the  second 
tender  could  be  made  would  run  until  the  latest  date  at  which  goods 
would  have  arrived  from  the  Orient  if  shipped  within  contract  time. 

"Buyer  makes  reference  to  having  understood  that  he  was  purchasing 
a  re-sale  parcel  and  implies  that  he  only  dealt  with  this  Seller  because 
Seller  satisfied  Buyer  that  he  had  a  purchase  contract  with  a  responsible 
supplier.  This  is  not  pertinent  to  the  present  case,  as  there  is  nothing 
in  the  contract  between  Buyer  and  Seller  which  shows  that  Buyer 
treated  Seller  in  any  other  light  than  that  of  a  principal.  Any  Buyer 
who  wishes  to  have  behind  him  the  responsibility  of  a  Seller's  supplier 
can  only  do  so  by  having  Seller's  supplier  endorse  in  some  way  Seller's 


REPORTS  245 

obligation  to  Buyer.  Arbitrators  feel  that  it  is  to  the  interest  of  the 
trade  to  point  the  injustice  worked  against  responsible  firms  when 
dealers  are  willing  to  accept  unguaranteed  contracts  from  those  whom 
they  and  their  brokers  do  not  believe  to  be  responsible." 

Held,  That  the  rejection  of  the  second  tender  by  Buyer  is  sustained 
on  the  ground  that  the  Seller  must  elect  his  option  of  a  new  tender 
within  a  reasonable  time,  and  also  that  the  tender  of  a  sampling  permit 
calling  for  a  five  pound  sample  of  goods  in  bond  is  not  a  valid  tender 
of  goods  sold  ex  dock.     (Foreign  Commerce  Association  No.  44,  1922). 

Right  of  Seller  to  Make  Second  Tender — Seller's  Obligation 
to  Make  Delivery  Under  a  Contract  Not  Containing  So-Called 
"Rejection  Constitutes  Delivery,,  Clause — Reasonableness  of 
Time  of  Retender — Life  of  Contract — A  Pacific  Coast  importer 
sold  to  a  San  Francisco  merchant  between  600  and  700  bags  of  Man- 
churian  Walnuts,  crop  of  1921,  November-December  (1921)  ship- 
ment from  the  Orient.  Seller  delivered  and  Buyer  accepted  107  bags 
under  the  contract.  In  the  early  part  of  January,  1922,  the  Seller 
tendered  under  the  contract  600  bags  of  walnuts,  which  were  rejected 
because  of  undersize  and  quality  being  below  90  per  cent  "good  crack." 
Seller  made  no  other  tender  until  February  2,  1922,  when  he  gave 
Buyer  an  inspection  order  calling  for  500  bags  of  nuts.  The  Buyer 
objected  to  the  tender  on  the  ground  that  the  nuts  did  not  crack  90 
per  cent  or  better  sound  sweet  meats;  that  %Yi  per  cent  or  more  of  the 
nuts  were  under  the  size  specified  in  the  contract,  and  Buyer  advanced 
two  additional  grounds  for  rejection,  as  follows: 

The  lot  as  a  whole  (apart  from  the  undersized  nuts  and 
the  poor  quality  of  the  meats)  shows  shells  so  rough  and 
heavily  indented  and  contains  so  heavy  a  percentage  of 
stained  shells,  that  it  is  impossible,  without  expensive  hand 
picking,  to  make  a  satisfactory  bleach  of  them,  with  the 
result  that  a  considerable  percentage  of  the  lot  is  practically 
unmerchantable. 

The  nuts  tendered  arrived  in  San  Francisco  on  December 
13,  1921.  They  were  not  tendered  to  the  Buyer  until  February 
1,  1922.  They  were  shipped  by  a  party  other  than  the  Seller 
and  probably  represent  a  lot  rejected  under  some  other 
contract.  These  nuts  were  bought  under  a  contract  calling 
for  November-December  shipment.  If  they  had  been  im- 
ported by  the  Seller  himself,  it  would  not  be  contended  that  . 
the  Seller  would  have  had  the  right  to  hold  them  without 


246  COMMERCIAL  ARBITRATION 

making  a  tender  of  them  for  fifty  days  after  they  had  arrived, 
and  it  certainly  cannot  be  claimed  that  he  has  any  greater 
right  to  tender  nuts  imported  by  another  person  which  have 
lain  in  San  Francisco  fifty  days  before  the  tender.  While  the 
other  grounds  already  dealt  with  amply  justify  the  rejection, 
it  should  be  sustained  on  this  ground  as  well. 

Seller  contended  that,  as  to  the  quality  and  size,  the  walnuts  should 
be  tested  by  arbitrators.  As  to  the  shells  being  rough,  he  pointed  out 
that  he  had  sold  "Manchurian  Walnuts",  and  had  delivered  such 
walnuts,  and  that  he  was  entitled  to  deliver  walnuts  as  produced. 
Concerning  his  right  to  make  a  new  tender,  Seller  stressed  the  following 
clause  in  the  contract: 

When  sale  provides  for  a  given  time  of  shipment  from 
abroad,  unless  based  upon  "payment  in  exchange  for  ocean 
documents",  Seller  has  the  option  of  filling  contract  with 
goods  shipped  earlier  than  contract  period,  provided  time  of 
delivery  is  approximately  the  same. 

Seller  also  contended  that  he  was  obliged  to  make  delivery  of  the 
walnuts,  since  his  contract  did  not  have  a  clause  specifying  "Rejection 
constitutes  delivery",  and  since  he  was  obligated  to  deliver,  Buyer  was 
bound  to  accept  a  valid  tender.  As  to  the  time  of  tender,  Seller  pointed 
out  that  the  contract  specified  November-December  shipment  from 
the  Orient,  and,  therefore,  he  was  entitled  (and  obligated)  to  make 
a  retender  at  any  time  within  the  life  of  the  contract,  and  that  the  life 
of  the  contract  extended  to  the  period  when  the  last  vessel  leaving  the 
Orient  in  December  arrived  at  San  Francisco,  the  port  designated  in 
the  contract;  that  as  the  S.  S.  "Tobo  Maru",  with  December  ladings 
from  the  Orient,  was  due  to  arrive  at  San  Francisco  about  February  22, 
1922,  he  had  up  to  that  time  to  make  other  tenders,  if  for  reasons  of 
size  or  crack  the  walnuts  before  the  arbitrators  were  rejectable. 

After  determining  that  the  walnuts  were  a  good  delivery  as  to  size 
and  "good  crack",  the  arbitrators 

Held,  As  to  general  appearance  of  the  walnuts:  The  contract 
specification  does  not  call  for  "bleached"  or  "f.  a.  q.",  nor  is  there 
any  guarantee  as  to  appearance,  brightness  of  shell,  etc.,  consequently 
the  nuts  are  a  good  delivery  in  this  respect. 

As  to  time  of  tender:  This  being  the  second  tender  under  the 
contract,  made  in  accordance  with  Buyer's  demand,  the  time  elapsing 
between  the  rejection  of  the  first  tender  and  the  tender  of  the  second 
lot,  does  not  appear  to  be  unreasonable,  particularly  so  since  Buyer 


REPORTS  247 

did  not  at  the  time  make  any  protest;  Buyer's  acceptance  of  Seller's 
inspection  order  on  or  about  February  1,  1922,  was  tacitly  an  ac- 
quiescence in  Seller's  right  to  make  a  second  tender  at  that  date. 

As  to  warranty  that  nuts  would  be  imported  by  Seller:  Buyer's 
remarks  in  this  connection  are  not  germain  as  the  Seller  not  having 
specifically  contracted  to  import  this  merchandise  himself,  naturally 
has  the  right  to  buy  from  others  to  fill. 

As  to  lapse  of  time  between  arrival  of  "Siberia  Maru"  and  tender 
of  the  nuts:  When  under  a  contract  Seller  is  obligated  to  make  a 
second  tender,  it  stands  to  reason  that  he  must  have  the  unexpired 
portion  of  the  contract  period  in  which  to  do  so,  as  he  must  purchase 
other  goods  that  will  make  substantially  the  contract  delivery.  Walnuts 
in  the  shell  do  not  deteriorate  in  warehouse  at  this  season  of  the  year. 
This  particular  lot  was  shipped  from  the  Orient  within  the  shipping 
time  stipulated  in  the  contract,  and  taking  into  consideration  all  of  the 
circumstances,  was  tendered  Buyer  within  a  reasonable  time.  Arbi- 
trators would  have  so  found,  even  if  these  walnuts  had  been  imported 
by  Seller  himself  by  the  "Siberia  Maru"  and  had  been  held  by  Seller 
here  in  the  warehouse. 

As  to  Buyer's  claim  for  damages  instead  of  a  third  tender. 
In  view  of  the  findings  in  this  case,  the  question  of  damages  raised 
by  Buyer  calls  for  no  decision,  but  arbitrators  desire  to  point  out  that 
as  the  contract  under  consideration  did  not  contain  the  clause  "Rejec- 
tion Constitutes  Delivery",  in  the  event  of  rejection  for  just  cause 
Seller  is  obligated  to  make  another  tender  (such  tender  of  course  to 
be  made  during  the  life  of  the  contract)  and  if  for  cause  said  second 
tender  were  rejected  and  the  contract  were  still  alive,  Seller  would  still 
be  bound  to  make  even  a  third  tender,  and  so  on  until  either  a  good 
tender  were  made  and  accepted  or  the  contract  time  for  delivery 
expired,  after  which  time  Buyer's  remedy  would  be  a  claim  against 
Seller  for  damages.  The  claims  of  the  Buyer  are  disallowed.  (Private 
Arbitration  at  San  Francisco,  January,  1922). 

Mistake  in  Tender  May  Be  Corrected — Withdrawal  of  Tender 
Is  Not  Acceptance  of  Rejection — Effect  of  War  on  Shipping — 

A  sold  to  B  2232  large  bags  Siam  Usual  Rice,  May  shipment  from  the 
Orient,  cash  against  delivery  order  at  Seattle.  On  July  24,  1918,  Seller, 
having  received  advices  from  the  railroad  carrier  at  Seattle  that  the 
rice  ex  "Arabia  Maru"  was  at  its  Seattle  depot  consigned  to  Seller, 
made  tender  to  Buyer.  Subsequently,  Seller  learned  from  the  rail 
carrier  that  its  notice  was  in  error,  and  Seller  withdrew  his  tender, 
offering,  at  the  same  time,  to  substitute  a  tender  of  rice  on  arrival  of 


248  COMMERCIAL   ARBITRATION 

S.  S.  "Chicago  Maru,"  a  May  steamer  from  Hongkong.  No  vessel 
was  named  in  the  contract.  The  rice  shipped  per  S.  S.  "Chicago  Maru" 
was  transhipped  per  the  S.  S.  "Kenkon  Maru,"  which  proceeded  to 
Tacoma,  and  discharged  there  instead  of  at  Seattle.  Freight  to  Seattle 
was  for  the  account  of  Seller.  Buyer  rejected  the  tender  ex  S.  S. 
"Chicago   Maru." 

In  discussing  the  case,  the  arbitrators  said: 

"The  Committee  has  taken  into  consideration  the  stress  of  cir- 
cumstances during  the  war  period  by  which  transportation  suffered 
during  that  period. 

"The  Committee  wishes  it  distinctly  understood  that  the  decision  in 
this  particular  case  is  not  to  be  considered  as  establishing  a  precedent 
that  goods  destined  for  delivery  at  a  designated  port  can  in  all  cases 
be  discharged  by  vessel  at  another  port  and  delivery  tendered  there  or 
the  goods  forwarded  to  the  point  of  destination  for  delivery  there. 

"Had  the  goods  in  question  constituted  a  full  cargo  or  had  this  been 
a  straight  C.  I.  F.  contract  between  Seller  as  shipper  at  Hongkong, 
and  Buyer  this  case  would  be  different. 

"The  goods  in  this  case  constituted  only  a  parcel  and  the  terms 
were  shipment  from  Hongkong  in  May,  cash  against  delivery  order  at 
Seattle,  with  no  vessel  designated  and  no  limit  specified  for  time  of 
arrival  at  Seattle,  and  the  goods  were  the  property  of  Seller  until 
delivery  at  Seattle  and  delivery  accepted  by  Buyer.  As  Tacoma  and 
Seattle  are  in  close  proximity,  the  Buyer  in  this  case  was  not  concerned 
how  the  goods  reached  Seattle  so  long  as  there  was  no  unreasonable 
delay  by  Seller  in  transporting  them,  at  his  expense,  from  Tacoma  to 
Seattle  and  delivering  same  there  in  good  order  in  accordance  with 
contract.  Seller  admits  transportation  charges  from  Tacoma  to  Seattle 
must  be  borne  by  him  and  that  he  must  make  delivery  at  Seattle  only, 
if  Buyer  so  insisted. 

"The  committee  has  considered  the  contention  of  Buyer  that  he 
suffered  by  having  to  buy  other  rice  for  shipment  to  South  America 
per  S.  S.  "Santa  Alicia"  on  account  of  non-arrival  before  that  vessel 
sailed  of  the  rice  shipped  per  S.  S.  "Arabia  Maru"  or  S.  S.  "Chicago 
Maru,"  but  in  view  of  the  fact  that  the  S.  S.  "Santa  Alicia"  sailed  from 
Seattle  about  July  16,  1918,  and  neither  of  the  parcels  shipped  via 
above  two  vessels  having  arrived  until  after  that  date,  and  there  being 
no  time  of  arrival  designated  in  the  contract,  which  only  provided 
for  May  shipment  from  Hongkong,  we  do  not  think  his  contention  is 
good. 


REPORTS  249 

"We  award  to  Seller  as  full  settlement  for  his  claim  in  this  case 
the  following  items: 

(1)  Loss  on  the  re-sale  of  2,232  bags  rice  ex  "Kenkon  Maru" 
estimated $2,025.85 

(2)  Interest  on  re-sale  price  of  1,232  bags  at  6  per  cent  from 
August  7,  1918  to  September  6,  1918. 

(3)  Interest  on  re-sale  of  1,000  bags  at  6  per  cent  from  August 
7,  1918  to  October  15,  1918. 

(4)  Interest  on  $2,025.85,  the  loss  on  re-sale  price  of  2,232 
bags  from  August  7,  1918  to  November  7,  1918.  (We 
fix  6  per  cent  as  a  reasonable  rate  of  interest  instead  of 
7  per  cent  claimed  by  Seller.) 

(5)  Storage  on  250  tons  at  25c  per  ton  for  one  month $62.50 

(6)  We  disallow  Seller's  claim  for  $50  cost  of  telegrams  and 
telephones. 

Supplementary  Award — The  arbitrators,  having  learned  after  the 
award  had  been  published  that  the  rice  had  not  actually  been  moved  to 
Seattle  from  Tacoma,  made  a  supplementary  award,  allowing  Buyer  a 
reduction  in  damages  an  amount  equal  to  the  cost  of  transporting  the 
2,232  bags  of  rice  to  Seattle  from  Tacoma.  (San  Francisco  Chamber 
of   Commerce   Arbitration,    1919). 

Affirmed  on  Appeal — The  Buyer  appealed  the  decision,  the 
arbitrators  on  appeal  affirming  the  award,  as  follows: 

"We  find  that  this  case  was  a  C.  I.  F.  sale  and  the  contract  stipulates 
that  "C.  I.  F.  and  C.  F.  sales  differ  from  F.  O.  B.  sales  only  in  that 
Seller  guarantees  insurance  and  freight  as  the  case  may  be;  no  additional 
responsibility  being  involved."  That  under  such  contract  any  damage 
by  delay  of  vessel  due  to  transhipment  or  actual  damage  if  any  to  the 
goods  shipped  are  for  Buyer's  account  and  not  for  Seller. 

"As  long  as  Seller  tendered  delivery  at  Seattle  of  rice  of  the  pre- 
scribed quality  that  was  shipped  from  Hongkong  in  May,  1918,  he 
fulfilled  his  contract  and  Buyer  was  bound  to  take  delivery  regardless 
of  whether  the  vessel  sailed  to  Tacoma  or  Seattle,  and  the  fact  that 
the  vessel  discharged  at  Tacoma  and  the  rice  would  have  to  be  trans- 
ported from  there  to  Seattle  before  actual  physical  delivery  could  be 
made,  does  not  affect  the  tender  at  Seattle,  provided  Seller  bore  the 
freight  charges  to  Seattle. 

"We  do  not  find  that  the  Arbitration  Committee  committed  error 
in  its  decision  of  January  31,  1919,  except  that  Buyer  is  entitled  to  an 
allowance  of  the  cost  to  Seller  of  transporting  said  rice  from  Tacoma 


250  COMMERCIAL  ARBITRATION 

to  Seattle,  which  matter  has  been  since  corrected  by  the  Arbitration 
Committee  in  its  Supplemental  Award  dated  February  21,  1919, 
which  has  been  brought  to  the  attention  of  the  Committee  on  Appeals 
and  said  decision  with  that  correction  is  hereby  confirmed.  (San 
Francisco  Chamber  of  Commerce,  1919). 

When  Second  Tender  Permitted — A  sold  B  a  quantity  of  20/30 
Prunes.  Although  tender  was  made  on  October  27th,  Buyer  requested 
delay  as  to  acceptance  or  rejection  until  November.  Thereupon  he 
rejected  the  entire  shipment,  Seller  contesting  and  claiming  that  he 
had  a  right  to  make  a  new  tender. 

Held,  That  Seller  had  the  right  of  a  second  tender.  (Dried  Fruit 
Association  of  California  Arbitration  No.  25,  1917). 

Limitation  in  Contract  as  to  Second  Tender — A  sold  to  B  a 
given  quantity  of  Japanese  and/or  Korean  Kotenashi  Beans,  H.  P. 
1919  crop,  not  to  exceed  2  per  cent  damage,  16  per  cent  moisture, 
Chamber  of  Commerce  certificate  to  be  final.  The  form  of  contract 
used  by  the  parties  expressly  stated:  Rejection  made  by  Buyers  and 
accepted  by  Sellers  constitutes  delivery.  The  contract  further  contained 
this  clause:  It  is  expressly  understood  that  Sellers  are  not  bound  by  any 
agreement  or  understanding  other  than  that  embodied  in  the  present  contract. 

Seller  tendered  a  lot  of  beans  with  San  Francisco  Chamber  of 
Commerce  certificate  which  showed  an  excess  percentage  in  the  moisture 
content.  Buyer  rejected.  Seller  accepted  the  rejection  and  then  at- 
tempted to  add  a  condition  thereto,  namely,  his  right  to  make  a  second 
tender  under  the  contract,  pleading  a  custom  of  the  trade  and  claiming 
the  application  of  Rule  15  of  the  Foreign  Commerce  Association. 
The  contract  was  not  the  Uniform  Contract  of  the  Foreign  Commerce 
Association  of  the  Pacific  Coast,  and  there  was  no  reference  therein  to 
the  rules  of  said  Association. 

Held,  That  there  is  an  express  limitation  in  the  contract  itself 
which  precludes  giving  force  and  effect  to  any  trade  custom  or  rules 
of  any  recognized  association,  and  the  parties  by  so  limiting  themselves 
by  written  contract  absolutely  prevent  the  application  of  the  custom 
long  recognized  and  accepted  by  the  trade,  namely,  other  tenders, 
provided  the  same  shall  be  made  within  the  life  of  a  contract.  (Cali- 
fornia Bean  Dealers  Association  Arbitration  No.  12,  1920). 

Tender  Must  Be  to  Designated  Agent — Seller  at  Fault  in 
Making  Unauthorized  Shipment — Sufficiency  of  Samples — 
A  sold  B  a  quantity  of  Oriental  Peanut  Oil,  maximum  2  per  cent  free 
fatty  acids,  Seller's  tanks.  B  rejected  one  tank  car  on  the  ground  that 
the  quality  did  not  conform  with  contract. 


REPORTS  251 

The  contract  was  dated  June  9,  1920,  and  was  the  Uniform  form 
adopted  February  14,  1920,  by  the  Foreign  Commerce  Association 
containing  the  usual  "clause  paramount."  Seller  contended  that  the 
contract  having  been  predicated  upon  rules  of  the  Foreign  Commerce 
Association  in  force  at  time  of  contract,  the  rules  dated  as  of  May  20, 
1920,  should  apply  and  that  the  rules  adopted  as  of  February  14,  1920, 
had  been  superseded  thereby.  Buyer  contended  that  the  rules  of 
Februaiy  14,  1920,  were  in  force  and  effect  at  the  time  the  contract 
was  entered  into  and  therefore  Rule  310  governed  this  contract. 

The  amended  rules  were  not  promulgated  by  the  Foreign  Com- 
merce Association  until  July  13,  1920.  It  is  true  that  early  in  May 
the  trade  generally  had  notice  through  trade  publications  that  the  New 
York  Produce  Exchange,  the  Interstate  Cottonseed  Crushers'  Associa- 
tion and  the  Foreign  Commerce  Association  had  adopted  rules  govern- 
ing trade  in  imported  vegetable  oils  and  that  this  fact  was  generally 
known  to  the  trade.  But  in  truth  and  in  fact  the  Foreign  Commerce 
Association  had  not  officially  published  the  rules  until  July  13,  1920 
and  therefore  they  could  not  have  been  in  force  and  effect  on  the  date 
of  the  contract  in  dispute,  namely,  June  9,  1920. 

Held,  That  this  contract  must  be  construed  under  the  rules  adopted 
as  of  February  14,  1920.  The  description  of  the  grade  in  the  contract, 
i.  e.  "Oriental  Peanut  Oil — maximum  2  per  cent  free  fatty  acids,"  is 
substantially  the  grade  as  set  forth  in  Rule  310,  Oriental  Peanut  Oil, 
crude,  guaranteed  not  over  2  per  cent  free  fatty  acids,  which  is  rejec table 
if  not  up  to  contract  grade.  On  the  other  hand,  the  language  of  the 
contract  does  not  convey  the  idea  that  Seller  intended  to  offer  the 
grade  covered  by  Rule  323  ol  the  amended  rules — "Peanut  Oil,  Fair 
Average  Quality,  Crude,"  which  is  not  an  oil  with  the  guaranteed 
maximum  of  free  fatty  acids,  but  a  non-re jec table  grade,  with 
allowance. 

On  the  question  of  tendering  and  sampling  the  oil  in  dispute  the 
arbitrators  were  of  the  opinion  that  a  named  forwarder  at  Seattle 
was  the  duly  authorized  agent  of  the  Buyer  and  the  contract  specifically 
provided  that  the  agent  sample  the  oil  deliverable  under  the  contract. 
Furthermore,  Seller  acquiesced  in  that  clause  in  that  the  first  nine  (9) 
cars  shipped  were  loaded,  passed  and  shipped  under  the  supervision 
of  the  agent.  Hence  the  arbitrators  said  that  Seller  could  not  argue 
that  that  clause  in  the  contract  had  no  binding  force  and  that  Seller 
was  at  fault  in  loading  the  car  in  question  before  the  agent  had  an 
opportunity  of  inspecting  the  equipment,  as  provided  under  Rule  107. 
In  the  event  of  a  dispute  between  parties  as  to  samples  for  arbitration, 


252  COMMERCIAL   ARBITRATION 

the  parties  should  have  afforded  the  Association  the  opportunity  of 
drawing  an  independent  sample,  the  arbitrators  said.  As  soon  as  Seller 
received  the  report  from  his  own  chemist  and  notified  Buyer  of  the 
difference  between  the  Seller's  chemist  and  the  Buyer's  chemist,  Seller 
should  have  notified  Buyer  that  an  independent  sample  and  analysis 
were  desired  for  arbitration  purposes.  The  arbitrators  declared  that 
Seller,  by  forwarding  the  car  to  destination  and  not  having  arranged 
for  an  independent  sampling,  technically  lost  his  right  of  arbitration, 
since  the  analysis  at  Chicago  could  not  be  held  to  be  an  independent 
analysis  and  therefore  was  of  no  value  to  the  arbitrators.  The 
arbitrators  said  that  it  was  true  that  the  market  was  far  more  stable 
at  the  time  the  car  was  shipped  than  at  the  time  it  was  resold,  but 
Seller,  having  been  in  default  by  reason  of  his  negligent  act  by  per- 
mitting the  car  to  go  forward,  was  blameable  and  responsible  for  the 
differential  between  the  market  prevailing  at  the  time  of  shipment 
and  that  certain  time  when  the  car  was  resold. 

Held,  That  while  the  arbitrators  are  disinclined  to  allow  a  rejection 
on  purely  technical  grounds,  they  are  of  the  unanimous  opinion  that 
Seller  did  not  properly  protect  his  own  on  Buyer's  interests,  and  Buyer 
was  within  his  rights  in  rejecting  the  tender,  that  rejection  therefore 
was  sustained  and  Seller's  claim  disallowed.  (Foreign  Commerce 
Association  Arbitration  No.  23,  1920). 

Under  "Spot"  Sale,  Buyer  Cannot  Cancel  Contract  Without 
Having  Demanded  Tender — Meaning  of  Term — A  sold  to  B  a 
quantity  of  Japanese  and/or  Korean  Kotenashi  Beans  in  bond,  ex 
warehouse  Seattle,  net  reweights,  cash  against  weight  tag  and  delivery 
order.  The  contract  contained  this  clause:  "Shipment:  Goods  spot 
Seattle:' 

The  contract  was  made  through  a  broker.  The  formal  signed  con- 
tract was  returned  by  B  to  the  broker,  under  date  of  August  9th,  and 
was  received  by  him  August  11th.  On  that  date  the  broker  trans- 
mitted the  contract  to  the  Seller  who  received  it  August  12th.  On 
August  22nd  Seller  notified  Buyer  he  was  ready  to  make  delivery  and 
asked  whether  Buyer  was  ready  to  accept  same.  Seller  was  notified 
to  furnish  required  documents  before  invoice  could  be  paid.  An  official 
tender  of  the  documents  was  made  by  Seller  on  August  25th.  Buyer, 
however,  claimed  that  documents  were  defective  and  that  among  other 
things  the  warehouse  receipt  was  not  properly  endorsed  by  a  New  York 
merchant  which  was  required  and  returned  the  documents. 

On  August  26th,  Buyer  claimed  he  noted  the  contract  was  for  spot 
delivery  Seattle,  and  that,  as  22  days  had  elapsed  since  the  purchase, 


REPORTS  253 

he  notified  Seller  he  was  cancelling  the  contract  on  account  of  non- 
performance. On  September  4th,  Seller  again  tendered  documents, 
with  warehouse  receipt  endorsed  by  a  New  York  merchant,  and  other 
documents  amended,  with  invoice,  which  were  refused. 

Held,  That  22  days  had  not  elapsed  on  August  25th,  as  Seller  did 
not  receive  the  contract  which  was  signed  by  Buyer  on  August  9th, 
until  August  12th,  and  furthermore,  no  evidence  was  submitted  that 
Buyer  had  during  that  time  made  any  demand  for  delivery.  It  is  in 
evidence  that  the  goods  were  on  hand  in  Seattle  at  the  time  the  sale 
was  made  August  4,  1919,  being  stored  and  inspected  at  East  Waterway 
Dock  August  2,  1919,  and  stored  in  East  Waterway  Dock  &  Warehouse 
Co.'s  No.  3  Warehouse,  August  12,  1919. 

We  further  find  that  a  contract  for  sale  of  spot  goods,  when  no  time 
for  delivery  is  specified  in  contract,  cannot  be  cancelled  by  Buyer,  if 
Seller  has  not  tendered  delivery,  until  request  for  delivery  has  been  made 
by  Buyer  and  Seller  fails  to  make  same  within  usual  time,  nor  can 
Seller  cancel  until  he  has  made  proper  tender  and  same  has  been  refused 
by  Buyer. 

As  the  contract  provided  no  specific  date  for  delivery,  and  Buyer 
in  this  case  made  no  demand  for  delivery  before  cancelling,  we  decide 
that  the  contract  is  in  force  and  Buyer  must  take  delivery  of  the  beans, 
as  he  must,  within  a  reasonable  time,  demand  delivery  before  cancelling 
for  non-performance.  (San  Francisco  Chamber  of  Commerce  Arbi- 
tration, 1919.) 

Award  Affirmed  on  Appeal — The  Buyer  appealed  from  the  fore- 
going award,  the  arbitrators  on  appeal  saying: 

"We  fully  agree  with  the  Arbitration  Committee  that  a  contract  for 
sale  of  spot  goods,  when  no  time  for  delivery  is  specified  in  contract, 
cannot  be  cancelled  by  Buyer  if  Seller  has  not  tendered  delivery,  until 
request  for  delivery  has  been  made  by  Buyer  and  Seller  fails  to  make 
same  within  usual  time,  nor  can  Seller  cancel  until  he  has  made  proper 
tender  and  same  has  been  refused  by  Buyer.  In  the  case  in  question 
the  provision  in  the  contract  Shipment :  Goods  spot  Seattle,  without  either 
of  the  terms  immediate  shipment  or  prompt  shipment  being  designated 
therein,  and  without  any  time  for  delivery  being  specified,  simply 
means  that  the  goods  were  on  hand  at  Seattle  at  the  time  the  sale  was 
made  and  subject  to  immediate  tender  by  Seller  on  demand  by  Buyer. 
Award  affirmed."  (San  Francisco  Chamber  of  Commerce  Arbitration, 
1919.) 


254  COMMERCIAL   ARBITRATION 

Tender  of  Delivery  Order  and  Warehouse  Receipts  Does  Not 
Comply  with  F.  O.  B.  Cars  Contract — Delivery  on  March  1st 
Does  Not  Fulfill  January-February  Shipment — A  San  Francisco 
merchant  sold  7,500  pockets  of  California  Japan  Rice  to  a  mill  in  the 
same  city,  January-February  shipment,  F.  O.  B.  cars  San  Francisco. 
Under  the  contract  5,500  pockets  were  delivered  in  accordance  with 
contract  before  the  expiration  of  the  contract  period,  leaving  2,000 
pockets  to  be  delivered  February  28th. 

February  28th  was  a  Saturday,  and  therefore  a  half  business  day. 
On  Monday,  March  1st,  Seller  tendered  the  remaining  2,000  pockets 
in  the  form  of  a  delivery  order  for  500  pockets  and  negotiable  warehouse 
receipts  for  1,500  pockets.  Seller  pointed  out  that  had  he  mailed  the 
documents  February  28th  they  would  not  have  been  received  until 
March  1st. 

Buyer  refused  to  accept  delivery  on  the  ground  (1)  that  the  time  of 
delivery  had  expired,  and  (2)  that  the  rice  tendered  was  not  in  the 
position  required  by  the  contract,  i.  e.  F.  O.  B.  cars  San  Francisco. 
Seller  contended  that  repeatedly  he  had  requested  shipping  instruction 
from  Buyer,  who  had  not  given  the  same  and  that,  in  fact,  the  Seller, 
at  the  request  of  the  Buyer,  had  delayed  delivery,  a  statement  disputed 
by  the  Buyer.  The  Buyer  contended  that  the  Seller  had  the  right  to 
tender  the  Rice  F.  O.  B.  cars,  San  Francisco,  at  any  time  within  the 
contract  period  and  he  would  have  been  obliged  to  accept  such  tender. 
Both  parties  claimed  damages  for  breach  of  the  contract. 

Held,  That,  there  being  contradictory  evidence  as  to  the  reason 
for  the  delay  in  making  delivery,  the  arbitrators  resort  to  the  contract, 
and  find  that  the  Seller  slept  on  his  rights  and  failed  to  make  delivery 
of  the  Rice  in  accordance  with  the  contract,  and  the  Buyer  is  therefore 
justified  in  refusing  to  accept  delivery  and  considering  the  contract 
cancelled.  The  claims  of  the  parties  for  damages  are  disallowed.  (Rice 
Association  of  California  Arbitration  No.  21,    1920). 


REPORTS  255 


Variation  in  Specific  Quantity  Sales 

The  general  contract  condition  covering  many  commodities  in 
foreign  commerce  is  that  when  a  sale  is  of  a  specific  quantity,  Seller 
must  deliver  and  Buyer  must  accept  as  fulfillment  of  contract,  5  per 
cent  more  or  less  than  the  quantity  named.  While  this  is  the  custom 
under  the  form  of  contract,  the  Foreign  Commerce  Association  has  a 
rule  (Rule  No.  8)  containing  this  proviso:  "provided,  however,  that 
Seller  shall  not  be  held  for  short  delivery  assessed  by  loss  in  weight  in 
transit,  or  in  handling  after  shipment,  and  up  to  point  of  delivery  due 
to  causes  beyond  Seller's  control."  (Foreign  Commerce  Association 
Rule  No.  8). 

Term  "Full  Cargo" — When  a  sale  is  of  a  "Full  Cargo"  (estimated 
at  a  stated  number  of  tons)  per  vessel  named  and  accepted  by  Buyer, 
the  estimate  shall  be  held  to  be  an  approximation  only,  and  the  con- 
tractual obligation  as  to  quantity  shall  be  "Full  Cargo",  and  Seller 
must  deliver  and  Buyer  must  accept  quantity  shipped  in  vessel  named. 
(Foreign  Commerce  Association  Rule  No.  7). 

No  Variation  in  Number  of  Tank  Cars — In  sales  of  Vegetable 

Oil,  quantities  may  be  5  per  cent  more  or  less,  except  that  on  F.  O.  B. 
cars  contracts  calling  for  delivery  of  a  given  number  of  tank  cars,  the 
exact  number  of  cars  must  be  delivered.  (Foreign  Commerce  Association 
Rule  No.  256,  New  York  Produce  Exchange  Rule  8). 

"About"  Number  Tons  Not  Specific  Quantity— Term  Is 
Uncertain  and  Indefinite— 5  Per  Cent  More  or  Less  Clause— 

A  sold  to  B  about  400  long  tons  of  sun-dried  Tonga  Copra  in  bulk, 
per  sailing  vessel  "Meteor"  from  Tonga  Islands,  estimated  sailing 
date  November-December,  1919.  Seller  delivered  336H  tons  to  Buyer, 
who  claimed  short  delivery  and  demanded  97,380  pounds  additional 
copra  in  bulk  F.  O.  B.  cars  Seattle,  at  9c  per  pound  net  weight,  or 
the  difference  in  value  of  the  copra  F.  O.  B.  cars  Seattle  on  January  27, 
1920,  which  it  was  claimed,  was  lie  per  pound  over  the  contract  price 
of  9c  per  pound,  or  2c  per  pound.  Buyer  contended  that  the  uniform 
Copra  contract  (Importers  and  Exporters  Association,  August  14, 
1919),  provided  in  Rule  No.  8  (Clause  15-B)  for  delivery  of  not  less 
than  5  per  cent  less,  nor  more  than  5  per  cent  more,  than  the  quantity 
named  and  that  Seller  was  obliged  to  deliver  "5  per  cent  more  or  less" 
than  400  tons.  Seller  contended  that  the  5  per  cent  variation  limit 
specified  in  the  rule  governing  variation  in  specific  quantity  sales,  did 


256  COMMERCIAL   ARBITRATION 

not  apply  to  the  transaction  inasmuch  as  it  was  not  a  specific  quantity 
sale,  but  that  the  term  about  gave  him  a  wider  latitude  in  the  delivery 
than  the  rule  provides. 

Held,  That  the  term  about  400  long  tons  is  not  a  specific  quantity 
sale,  and  Seller  therefore  is  not  required  to  deliver  within  5  per  cent 
more  or  less  of  400  tons.  The  term  "about"  is  both  uncertain  and 
indefinite  as  to  quantity,  and  cannot  be  construed  by  any  usage  or 
custom  of  the  trade  as  an  exact  limitation  upon  an  approximation  of 
the  quantity  fixed  in  a  contract.  The  use  of  the  phrase  about  in  the 
contract  directly  implies  a  wider  range  of  variation  than  would  other- 
wise have  been  the  case.  It  would  appear  from  the  facts  of  this  case 
that  the  "Meteor"  carried  676  tons,  of  which  3361-2  tons  were  delivered 
to  Buyer  under  this  contract.  In  the  interests  of  the  parties  and  of  the 
trade  generally  the  Arbitrators  desire  to  call  attention  to  what  they 
consider  careless  phrasing  of  this  contract.  Had  the  parties  intended 
that  the  sale  covered  a  specific  lot  of  400  long  tons  the  term  about 
should  not  have  been  used.  The  claim  for  short  delivery  is  denied. 
(Foreign  Commerce  Association  Arbitration  No.  22,  1920). 


REPORTS  257 


Weights 


The  rule  as  to  weights  varies  according  to  the  custom  of  trade 
in  commodities  and  is  governed  by  the  contract  of  sale.  If  a  contract 
calls  for  "shipping  weights",  the  carrier's  weight  is  taken  as  final. 
If  a  contract  specifies  "landed  weights",  the  weight  of  goods  as  landed 
is  final. 

In  certain  domestic  trades,  uniform  contracts  provide  the  size  and 
style  of  package,  and,  as  the  Federal  and  various  State  statutes  require 
the  marking  of  containers,  the  usual  custom  is  to  pack  the  goods  in 
even  weight  packages. 

When  (before  the  adoption  of  the  30-day  rule  by  the  trade)  Beans 
are  sold  ex  warehouse  weights  to  be  adjusted,  a  claim  of  Buyer  for  an 
adjustment  on  weights  twenty-eight  months  after  purchase  was  allowed, 
but  the  amount  demanded  was  modified  on  the  ground  that  both 
Buyer  and  Seller  were  dilatory  in  making  the  adjustment.  It  was  in 
evidence  that  the  Buyer  had  had  the  beans  reweighed  as  shipped  out 
of  warehouse.  The  contract  specified  that  public  weigher's  certificate 
of  weight  was  to  be  final.  (San  Francisco  Chamber  of  Commerce 
Arbitration,  1922,  Page  260). 

Under  a  C.  I.  F.  contract  covering  Peanut  Oil,  Seller  is  not  re- 
sponsible for  loss  in  weight  after  shipment.  (San  Francisco  Chamber 
of  Commerce  Arbitration,  1919,  Page  64). 

Variation  in  Excess  of  1  Per  Cent  in  Weight  of  Dried  Fruit — 
Public  Weights  Taken — A  sold  B  a  carload  of  Prunes.  Upon  arrival 
at  destination  (Chicago)  consignee  claimed  that  the  shortage  in  weight 
exceeded  the  one  (1%)  per  cent  allowable  under  the  contract  of  sale, 
and  demanded  reimbursement  therefor  from  the  Seller,  who  contested 
the  claim  on  the  ground  that  the  public  weigher  in  Chicago,  in  arriving 
at  the  amount  of  the  shortage,  had  not  weighed  the  entire  shipment, 
but  only  ten  boxes  of  each  size,  and  that  the  weights  of  the  remainder 
of  the  shipment  were  estimated,  by  multiplying  the  percentage  of 
boxes  so  weighed  and  applying  such  average  to  the  remaining  portion 
of  the  shipment.  Seller  contended  that,  as  each  box  was  weighed  when 
the  car  was  loaded,  his  weights  as  taken  prior  to  shipment  were,  if 
anything,  more  reliable  than  the  weights  taken  at  destination.  The 
sale  was  F.  O.  B.  Pacific  Coast. 

Held,  That  while  the  weigher  should  have  taken  ten  (10%)  per  cent 
as  a  basis  to  avoid  question,  the  five  (5%)  per  cent  he  did  take  was 
sufficient  to  establish  the  shortage,  in  that  it  was  taken  at  destination 


258  COMMERCIAL   ARBITRATION 

by  a  disinterested  party  and  a  public  official,  whereas  the  packing 
house  weights  were  taken  in  the  ordinary  course  of  business  by  employees 
of  shipper  and  the  goods  were  thereafter  subject  to  transit.  The  claim 
for  shortage  is  therefore  allowed  and  Seller  directed  to  repay  Buyer 
the  sum  involved,  together  with  costs  of  weighing.  (Dried  Fruit 
Association  of  California  Arbitration  No.  259,  1915). 

Effect  of  Changing  Dried  Fruit  Specifications — Trade  Custom 
Does  Not  Apply — Contract  May  Not  Be  Altered  Except  by 
Mutual  Consent — A  sold  to  B  several  thousand  25-pound  boxes  of 
Prunes  under  the  Uniform  Dried  Fruit  Contract.  Prior  to  shipment, 
Buyer  requested  that  a  portion  of  the  shipment  be  packed  in  50-pound 
boxes,  unfaced.  In  acceding  to  his  request,  Seller  fixed  arbitrarily 
a  differential  of  one-quarter  (J^c)  cent  between  the  price  of  the  50's 
unfaced  and  the  25's  faced  on  that  portion  of  the  shipment  which,  at 
Buyer's  request,  went  forward  in  50-pound  boxes  instead  of  the  25- 
pound  boxes  provided  for  in  the  contract.  The  contract  did  not  give 
the  Buyer  the  option  of  designating  other  packing  than  that  specified 
when  the  contract  was  made.  Buyer  claimed  that  he  was  entitled  to 
the  benefit  of  a  differential  of  three-eighths  (j^c)  cents  a  pound,  basing 
his  claim  upon  a  trade  custom  established  in  the  dried  fruit  industry. 
Seller  maintained  that  the  trade  custom  was  intended  to  apply  to  sales 
as  follows: 

First:  When  goods  had  been  sold  on  a  bulk  basis,  the  Buyer 
being  unable  (or  permitted)  to  furnish  his  assortment  of  sizes  and 
packing  at  a  late  date,  and, 

Second:  To  bring  about  uniformity  in  changes  where  the  contract 
especially  gave  the  Buyer  the  right  to  change  his  instructions  as  to 
facing  and  size  of  packages  at  a  later  date. 

Held,  That  the  contract,  having  specifically  provided  for  25-pound 
boxes,  the  trade  custom  set  up  by  Buyer  had  no  application.  We  are 
of  the  opinion  that  as  the  contract  did  not  provide  for  a  variation  in 
packing  the  Seller  was  at  liberty  either  to  refuse  the  Buyer's  request 
or  state  the  terms  upon  which  he  was  willing  to  comply  therewith, 
which  he  did  in  a  letter  to  Buyer.  The  claim  for  %c  differential  on  the 
50-pound  unfaced  boxes  is  disallowed  and  Buyer  is  assessed  with  costs. 
(Dried  Fruit  Association  of  California  Arbitration  No.  242,  1914). 

Delayed  Determination  of  Tare — Unusual  Delay  in  Ascer- 
taining Tare — Guaranteeing  of  Tare  Weights — Under  date  April 
6,  1918,  A  sold  to  B  2000  tons  of  Copra  in  bags,  net  cash  on  the  net 
delivery  weight,  San  Francisco. 


REPORTS  259 

When  the  Copra  arrived,  the  Seller  notified  Buyer  that  on  account 
of  the  great  variety  of  bags  used  in  making  this  shipment,  it  was  impos- 
sible for  him  to  get  accurate  tare  in  San  Francisco,  and  Seller  had 
therefore  to  use  the  tare  rendered  by  his  original  Seller  in  Manila, 
which  was  2.02  pounds.  Seller  suggested  that  Buyer  use  the  same  with 
his  purchaser,  Seller  on  his  part  agreeing  to  stand  behind  Buyer  should 
there  be  any  bona  fide  claim  for  additional  tare. 

One  lot  of  this  Copra  was  shipped  by  Buyer  to  Minneapolis  to  a 
buyer  there,  and  was  weighed  at  Minneapolis  on  June  13,  1918.  The 
other  lot  was  shipped  to  Philadelphia  and  was  there  placed  in  storage 
and  was  not  weighed  to  determine  the  tare  until  some  months  later. 

On  April  16,  1919,  Buyer  made  claim  on  Seller  for  additional  tare 
on  these  two  lots  advising  him  that  the  Minneapolis  weights  showed  a 
tare  of  2.88  pounds  and  that  the  Philadelphia  weights  showed  a  tare  of 
2.75  pounds,  and  Buyer  claimed  an  allowance  of  $2960.86  for  a  difference 
in  tare. 

Held,  That  Buyer  was  negligent  in  not  notifying  Seller  promptly 
of  the  difference  in  tare  claimed  on  the  Minneapolis  lot  so  that  Seller, 
if  not  satisfied,  could  have  had  opportunity  to  check  the  tare  himself. 
We  also  consider  that  Buyer  should  have  notified  Seller  that  the  Phila- 
delphia lot  would  not  be  delivered  to  a  buyer  at  that  time  but  would 
be  stored. 

The  evidence  shows  that  Seller  received  no  notice  of  any  claim  for 
excess  tare  on  either  of  the  above  lots  until  April  16,  1919,  although  the 
bags  in  the  Minneapolis  lot  were  weighed  June  13,  1918,  approximately 
10  months  previously. 

Seller's  wire  of  May  15,  1918,  to  Buyer  agreeing  to  protect  him 
against  any  bona  fide  claim  for  additional  tare  from  Buyer's  purchaser, 
clearly  indicates  that  Seller  believed  copra  had  then  been  sold  by  Buyer 
and  that  if  any  additional  tare  should  be  claimed,  he  would  be  notified 
thereof  within  a  reasonable  time.  Had  Seller  known  that  the  copra 
was  not  all  sold  at  that  time,  he  might  not  have  given  such  an  open 
guarantee. 

On  the  other  hand,  we  believe  that  the  bags  would  have  been  found 
to  have  absorbed  some  oil  and  dirt,  before  arriving  at  San  Francisco 
had  they  been  weighed  here,  but  it  is  impossible,  of  course,  to  accurately 
determine,  at  this  time,  what  percentage  of  weight  this  would  have 
been. 

While  we  do  not  question  Eastern  weights,  the  bags  certainly  would 
have  gained  weight  in  transit  and  during  storage  through  absorption 
of  oil  and  dirt,  and  there  is  no  evidence  that  the  bags  when  weighed  in 


260  COMMERCIAL   ARBITRATION 

the  East  were  thoroughly  shaken  free  of  dirt.  So  it  is  reasonable  to 
believe  that  a  certain  amount  of  dirt  was  included  in  the  Eastern 
weights  in  addition  to  that  which  had  been  absorbed. 

After  taking  this  and  all  other  matters  submitted  in  evidence  into 
consideration,  we  feel  that  a  fair  average  settlement  would  be  a  tare  of 
2.42  pounds  per  sack  on  both  lots. 

We,  therefore,  decide  that  Seller  shall  allow  Buyer  2.42  pounds  tare 
on  both  lots  of  copra  in  question  and  that  this  allowance  when  made 
shall  constitute  full  settlement  of  this  case.  (San  Francisco  Chamber 
of  Commerce  Arbitration,  1920.) 

Seller  Responsible  for  Uneven  Weights  Under  F.  O.  B.  Cars 
San  Francisco  Contract  When  Goods  Originate  at  Interior 
Point — Containers  Must  Be  in  Shipping  Condition — A  Pacific 
Coast  milling  company  purchased  3,000  pockets  of  Fancy  California 
Japan  Rice,  F.  O.  B.  cars,  San  Francisco.  The  Seller  shipped  the  rice 
from  an  interior  point  and  delivered  the  goods  in  warehouse  at  San 
Francisco.  The  Buyer  claimed  that  the  bags  were  in  poor  condition 
and  that  a  quantity  of  the  rice  had  leaked  out  in  transit,  resulting 
in  short  weights  and  necessitating  scaling  to  even  weights,  resowing, 
and  in  some  instances,  resacking.  The  Buyer  demanded  that  he  be 
reimbursed  for  these  charges.  The  Seller  claimed,  that  he  was  not 
responsible  for  the  variation  in  weight,  in  view  of  the  contract  pro- 
vision that  no  claims  for  short  weight  shall  be  made  where  shortage  does 
not  exceed  one-half  of  1  per  cent. 

Held,  That  the  contract  called  for  delivery  F.  O.  B.  cars  San  Fran- 
cisco, and  Buyer  is  entitled  to  weights  at  San  Francisco,  and  inasmuch 
as  the  same  were  not  furnished,  Seller  shall  pay  $70.79,  representing 
35  bags  light  weighed,  and  the  cost  of  resowing  144  sacks.  Also  the 
Seller  shall  put  the  rice  containers  in  shipping  condition  at  his  expense. 
(Rice  Association  of  California  Arbitration  No.  11,  1920). 

When  Sale  is  on  "Weights  to  be  Adjusted" — Weights  Should 
be  Taken  in  Reasonable  Time — Both  Parties  Negligent — First 
Weight  Taken  as  Average — In  August,  1919,  A  sold  to  B  a  quantity 
of  Nagauzura  Beans,  ex  warehouse,  payment  against  documents, 
weights  subject  to  final  adjustment  on  the  basis  of  gross  delivered 
weights,  less  \Vi  pounds  tare,  public  weigher's  certificate  of  weight  to 
be  final.  The  Buyer  paid  the  invoice  price  on  presentation.  The  invoice 
was  for  "approximately  398,800  pounds  of  beans."  December  12,  1921, 
more  than  two  years  after  the  sale  and  purchase,  the  Buyer  made  claim 
for  an  adjustment  on  14,469  pounds  of  beans  at  $5.75,  or  a  total  of 


REPORTS  261 

$831.97.  The  Buyer  maintained  that  the  beans  had  been  reweighed  as 
shipped  over  a  period  beginning  in  January,  1920,  and  ending  in  Decem- 
ber, 1921.  The  Seller  resisted  the  claim  on  the  ground  that  the  weight 
adjustment  was  not  made  until  two  years  and  four  months  after  the 
sale  had  been  made  and  Buyer  had  taken  delivery  of  the  goods  ex 
warehouse. 

The  Seller  in  his  submission  to  arbitration  said: 

"Seller  could  not  possibly  be  expected  to  pay  for  any  loss 
in  weight  which  might  have  occurred  through  the  moving 
and  shifting  of  the  beans,  through  possible  loss  in  weight  on 
account  of  damage  by  weevils,  etc.,  which  is  not  at  all  unlikely 
after  a  period  of  two  years,  and  further,  in  the  interim,  there* 
was  a  serious  accident  to  the  sprinkling  system  in  the  ware- 
house which  damaged  at  least  a  part  of  this  lot,  as  is  shown 
by  the  fact  that  it  was  necessary  for  the  Buyer  to  remove 
and  recondition  a  part  of  the  lot.  All  the  Buyer's  actions  in 
connection  with  these  matters  after  delivery  of  the  warehouse 
receipt  to  him  were  taken  without  consulting  Seller  in  any  way. 
The  terms  final  adjustment  on  basis  of  gross  delivered  weights 
means  as  between  Buyer  and  Seller,  and  not  as  between  Seller 
and  one  or  more  outside  parties  with  whom  Buyer  may  have 
done  business  and  who  were  absolutely  unknown  to  Seller 
even  at  this  date. 

"The  question  of  reweights  is  a  very  important  one  and 
should  be  carefully  considered  before  rendering  any  decision 
which  would  upset  conditions  and  customs  which  have  been 
in  effect  for  years.  It  is  contrary  to  the  established  custom  and 
good  business  principles  to  consider  claims  after  such  an 
extraordinary  delay  (twenty-eight  months  after  warehouse 
delivery)  and  a  decision  in  favor  of  Buyer  would  set  a  very 
dangerous  precedent  and  completely  upset  long  standing 
customs  and  conditions  prevailing  in  this  trade  and  other 
trades  generally/" 

As  to  the  damage  to  a  portion  of  the  lot  on  account  of  accident 
to  the  sprinkler  system  in  the  warehouse,  the  Buyer  pointed  out  that 
his  weight  adjustment  claim  called  for  only  the  gross  weight  on  448 
bags  which  were  damaged  by  water  and  no  deduction  was  made  for 
reconditioning  or  handpicking  the  beans.  The  Buyer  denied  there  was 
any  loss  in  weight  due  to  shifting  or  moving  in  warehouse,  and  none  due 
to  weevil  as  the  beans  were  all  sound  and  free  from  defects  at  time  of 
shipment  out  of  the  warehouse.   In  his  submission,  the  Buyer  said: 


262  COMMERCIAL   ARBITRATION 

"I  bought  these  goods  in  bond  ex  warehouse,  re  weights,  with 
\Yi  pounds  tare  allowance,  public  weighmaster's  certificate 
to  be  final;  thus  the  contract  provides  for  no  other  basis  of 
adjustment   of   weights   except   on   a   public    weighmaster's 
certificate.    I  secured  such  public  weighmaster's  certificates, 
and  furnished  them  in  connection  with  my  claim." 
As  to  the  long  standing  trade  custom  asserted  by  Seller,  the  Buyer 
insisted  that  no  precedent  would  be  established  by  an  award  in  his 
favor  nor  any  trade  custom  upset,  but  on  the  contrary  would  compel 
Seller  to  fulfill  the  conditions  of  the  contract. 

Held,  That  the  beans  arrived  and  went  into  warehouse  July  1,  1919, 
but  no  withdrawal  was  taken  by  Buyer  until  November  20,  1920, 
nearly  fifteen  months  later,  and  we  feel  that  this  was  over  and  above  a 
reasonable  time  for  weighing  by  Buyer.  Both  parties  were  at  fault  in 
this  case.  Seller  having  sold  goods  "ex  warehouse  Seattle,  Seattle 
re- weights  *  *  *  Public  weighmaster's  certificate  to  be  final," 
it  was  his  duty  to  have  stated  in  the  contract  that  weighing  was  to  be 
done  within  some  stipulated  time,  as  there  was  no  specified  time  for 
adjusting  weights  mentioned  and  no  rule  or  recognized  custom  of  the 
trade  as  to  time  in  which  weighing  must  be  done  existed  at  the  time 
the  contract  was  made.  While  such  a  rule  was  adopted  in  January, 
1920,  this  would  not  apply  in  this  contract. 

The  first  withdrawal  taken  November  20,  1920,  showed  a  loss  in 
weight  of  1.834  lbs.  per  bag,  and  the  arbitrators  consider  this  an  average 
shrinkage  for  fifteen  months'  time  in  warehouse. 

We  consider  that  one  year  in  which  to  take  delivery  and  re- weigh 
the  entire  shipment  of  the  beans  in  this  case  is  the  maximum  of  time  in 
which  an  adjustment  of  weights  should  have  been  made,  in  view  of  the 
fact  there  was  at  the  time  of  making  the  contract,  or  at  time  of  payment, 
no  recognized  time  limit  in  which  to  adjust  weights. 

Consequently  we  find  that  1.75  lbs.  per  bag  on  the  total  3,988  bags 
delivered  is  a  fair  allowance  for  shrinkage  from  time  of  delivery  to 
warehouse,  July  1,  1919,  until  time  of  final  withdrawal  by  Buyer, 
December  7,  1921. 

We  decide  that  Seller  shall  allow  Buyer  1.75  lbs.  per  bag  on  the 
entire  shipment  of  3,988  bags  delivered,  as  full  settlement  of  the  dif- 
ference in  weights  to  be  adjusted  in  this  case.  (San  Francisco  Chamber 
of  Commerce  Arbitration,  1922). 

Delay  in  Tender  of  Weight  Certificate  and  Warehouse  Receipt 
Not  Justification  for  Cancellation  of  Contract — A  Pacific  Coast 
importer  sold  to  a  San  Francisco  merchant  a  quantity  of  Maruzura 


REPORTS  263 

Beans,  ex  warehouse  Seattle:  The  beans  arrived  at  Seattle  ex  S.  S. 
"Atsuta  Maru"  March  21,  1918,  and  Seller  delayed  presentation  of 
warehouse  receipt  for  some  time.  When  the  documents  were  presented, 
Buyer  rejected  the  tender,  claiming  that  Seller  was  negligent  in  not 
forwarding  weight  certificate  and  warehouse  receipt  within  a  reasonable 
time  after  the  beans  had  been  stored  in  his  name.  Buyer  further  claimed 
that  he  was  prevented  from  reselling  the  beans  because  of  the  absence 
of  these  documents.  He  maintained  that  he  was  entitled  to  cancel  the 
contract  on  account  of  this  delay. 

Held,  That  delay  in  furnishing  warehouse  receipt  and  weight 
certificate  was  not  sufficient  grounds  for  Buyer  to  cancel  the  contract, 
or  to  consider  it  cancelled,  for  the  reasons  given  in  his  statement.  We 
feel  that  Seller  was  negligent  in  not  securing  and  forwarding  to  Buyer 
the  warehouse  receipt  within  a  reasonable  time  after  the  beans  had  been 
stored  in  Buyer's  name.  We  do  not  consider,  however,  that  the  delay 
in  furnishing  warehouse  receipt  and  weight  certificate  was  sufficient 
grounds  for  Buyer  to  cancel  the  contract,  for  the  lack  of  these  documents 
would  not,  under  general  trade  custom,  have  prevented  him  selling 
the  beans  if  he  had  an  opportunity  to  do  so.  Buyer  claims  he  was 
unable  to  sell  the  beans  as  it  is  against  his  policy  to  make  a  sale  of  beans 
without  having  in  his  possession  the  aforesaid  documents,  but  the 
Committee  can  find  nothing  which  would  have  prevented  his  making 
sales  immediately  after  receiving  Seller's  notification  of  March  21,  1918, 
that  the  600  bags  of  beans  in  question  had  arrived  at  Seattle  on  a 
designated  steamer. 

We  decide  this  case  in  favor  of  Seller,  and  we  decide  that  the  contract 
in  question  is  still  in  force  and  that  Buyer  must  receive  and  pay  for  the 
600  bags  of  beans.  (San  Francisco  Chamber  of  Commerce  Arbitration, 
1918). 

Buyer  Entitled  to  Weights  at  Destination  in  Absence  of 
True  Shipping  Weights — Under  a  contract  for  Beans  sold  F.  O.  B. 
cars  Stockton,  Buyer  gave  instructions  to  make  shipment  to  St.  Louis 
after  weighing  the  beans  as  loaded  into  the  car.  Seller  failed  to  have 
weighing  done  as  instructed,  and  weights  were  certified  by  a  public 
weigher  at  St.  Louis,  showing  a  shortage  of  789  pounds  in  the  billed 
weights  and  the  arrival  weights.  Buyer  claimed  an  allowance  for  the 
loss  in  weight. 

Held,  That  Buyer  is  entitled  to  correct  weights  at  time  of  shipment, 
failing  which,  weights  taken  at  destination  by  disinterested  weigher 
shall  govern,  and  Buyer's  claim  is  allowed.  (San  Francisco  Grain 
Trade  Association  Arbitration,  1915). 


264  COMMERCIAL   ARBITRATION 

When  Contract  Specifies  "Usual  Packing' '  for  Peanuts, 
Weight  May  Exceed  100  Pounds  Per  Bag — Term  is  Uncertain 
— Effect  of  Delay  in  Acting  Upon  Rejection — A  sold  to  B  100  tons 
Chinese  Shelled  Peanuts  30/32s  from  Shanghai,  f .  a.  q.  of  the  Season, 
usual  packing.  When  the  goods  were  tendered,  the  delivery  order 
indicated  that  the  bags  weighed  180  pounds  each,  and  Buyer  rejected 
on  the  ground  that  usual  packing  was  in  bags  weighing  100  pounds  net 
each.  Notice  of  rejection  was  given  March  11th,  but  Seller  did  not 
act  thereon  until  March  23rd,  twelve  days  later,  when  he  insisted  upon 
acceptance  of  tender.  A  third  complaint  by  Buyer  was  that  the  goods 
did  not  conform  to  contract  count. 

The  arbitrators  took  up  the  three  questions  involved  in  the  following 
manner: 

'Tacking — The  word  usual  in  a  contract  to  designate  packing  is 
subject  to  criticism  as  not  being  specific  and  opening  the  door  to  dispute. 
It  was  brought  out  in  the  arbitration  that  some  peanuts  are  shipped 
from  China  in  various  sized  packages,  namely,  200-lb.,  180-lb.,  160-lb. 
and  100-lb.  Investigation  developed  the  fact  that  100-lb.  packages 
when  used  in  shipments  from  Chinese  points,  are  no  more  usual  than 
other  weights  and  the  condition  and  quality  of  the  commodity  was 
in  no  way  deteriorated  as  the  result  of  the  packing,  but  that  in  this 
particular  case,  in  as  much  as  both  the  Buyer  and  Seller  apparently  had 
in  mind  100-lb.  packages,  should  the  Buyer  find  it  necessary  to  repack 
these  peanuts  into  100-lb.  packages  the  Seller  should  be  called  upon  to 
pay  the  expense  both  as  to  costs  of  bags  and  the  labor,  but  shall  receive 
in  return  the  empty  180-lb.  bags.  All  other  expenses  incurred  shall 
be  for  the  account  of  the  Buyer. 

"Delivery — The  contract  specifically  provides  that  Rejection 
by  Buyer  and  acceptance  by  Seller  constitutes  delivery.  The  rejection 
was  made  by  the  Buyer  but  no  acceptance  was  acknowledged  by 
Seller  and  if  delayed  it  was  clearly  the  Buyer's  duty  to  have  strengthened 
his  position  properly  by  insisting  upon  a  prompt  specific  acceptance  or 
refusal.  In  any  event  the  matter  became  a  dispute  which  is  provided 
for  in  the  contract  to  be  settled  by  arbitration  and,  therefore,  as  the 
delay  was  permitted  by  Buyer  it  is  no  ground  for  rejection. 

"Grading — The  arbitrators  made  two  different  tests  of  two  dif- 
ferent samples  made  at  two  different  times  from  the  shipment,  which 
average  within  the  count  30/32s,  and  these  taken  in  connection  with 
the  general  quality  of  the  nuts,  do  not  justify  rejection."  (Foreign 
Commerce  Association  Arbitration  No.  13,  1920). 


REPORTS  265 

Award  Approved  on  Appeal — The  Buyer  appealed  from  the  award, 
the  arbitrators  on  appeal  saying: 

"The  arbitrators  herein  do  not  consider  that  the  original  arbitrators 
were  justified  in  asserting  or  assuming  the  reference  made  by  the  Buyer 
to  a  conversation  had  with  the  Seller  at  his  office  after  tender  indicated 
that  both  Buyer  and  Seller  apparently  had  in  mind  100  pound  bags. 
They  do  not  consider  it  important  as  to  whether  Buyer  and  Seller  did 
or  did  not  have  100  pound  bags  'in  mind'  so  long  as  they  did  not 
specifically  provide  therefor  in  the  contract.  They  do  not  consider  the 
conversation  referred  to  justifies  this  assumption,  but  as  the  original 
arbitrators  conceded  to  the  Buyer  the  privilege  of  putting  the  goods 
into  100-pound  bags,  and  the  Seller  has  not  appealed  therefrom,  that 
portion  of  the  findings  must  stand. 

"They  quite  agree  with  the  statement  that  the  word  usual  in  a 
contract  opens  the  door  to  controversy,  and  is  not  sufficiently  definite 
to  properly  and  specifically  express  the  intention  of  the  parties.  What 
may  be  usual  during  any  given  period  may,  under  present  world  con- 
ditions, cease  to  be  usual  within  a  very  short  time  thereafter,  and  in 
the  interest  of  good  business  and  the  avoidance  of  any  mode  of  ex- 
pression that  may  result  in  controversies  between  business  men,  the 
greatest  care  should  be  used  in  drawing  contracts  to  cover  important 
features  definitely  and  specifically. 

"They  do  not  consider  the  arbitrators  were  justified  in  the  statement 
that  100-pound  bags  were  no  more  usual  than  other  weights,  so  they 
find  that  the  100-pound  bag  is  employed  in  packing  import  shelled 
peanuts  more  frequently  than  other  bags,  but  not  to  such  an  extent 
as  to  make  it  an  invariable  condition  in  the  case  of  such  importations. 
The  use  of  the  term  usual  packing  in  the  provisions  of  the  contract  is 
not,  therefore,  sufficiently  definite  to  warrant  Buyer's  rejection  of  the 
tender  because  of  the  fact  that  the  nuts  were  packed  in  bags  of  180 
pounds  net  weight  each,  rather  than  in  bags  of  100  pounds  net  weight 
each. 

"As  to  appellant's  contention  set  forth  in  his  brief  that  because  of 
the  reference  made  by  the  arbitrators  to  the  conversation  above  re- 
ferred to,  the  findings  thereby  establish  "absolutely  beyond  any  doubt 
whatsoever  the  fact  that  when  the  Seller  and  the  Buyer  entered  into 
the  contract  for  the  purchase  and  delivery  of  these  peanuts  they  con- 
tracted for  peanuts  in  bags  of  100  pounds  each."  They  cannot  imagine 
that  such  construction  could  possibly  be  placed  upon  the  language  used 
and  are  of  the  opinion  the  arbitrators  were  merely  justifying  the  con- 
sideration given  Buyer  on  his  contention  for  the  100-pound  bags. 


266  COMMERCIAL   ARBITRATION 

"So  far  as  the  argument  of  the  appellant  is  concerned  on  the  question 
of  tender  and  rejection,  the  arbitrators  feel  that  prompt  tender  was 
made;  that  sample  was  submitted  here  as  a  matter  of  accommodation 
to  Buyer;  that  after  Buyer's  rejection  which  was  also  based  upon 
count  as  the  result  of  the  so-called  private  certificate;  that  Seller  used 
due  diligence  in  refuting  this  claim  by  obtaining  Chamber  of  Commerce 
certificate  from  Seattle,  thereby  confirming  his  original  tender  to  Buyer 
as  being  good  as  to  count,  and  that  this  question  being  further  verified 
by  the  arbitrators,  their  finding  thereon  must  be  sustained.  The  further 
delay  Buyer  appears  to  be  wholly  responsible  for,  as  he  has  unneces- 
sarily procrastinated  over  a  period  from  April  26th,  when  he  served  his 
notice  of  appeal,  to  June  2nd,  when  he  filed  his  appeal  brief. 

"In  view  of  the  foregoing  the  arbitrators  herein  unanimously  sustain 
the  original  findings  and  award  and  further  find: 

That  Seller  is  entitled  to  interest  at  the  rate  of  six  per  cent 
on  the  amount  due  from  April  26th  date  of  original  findings, 
to  date  of  payment  and  shall  not  be  held  responsible  for  any 
deterioration  in  the  nuts  from  said  date.  (Foreign  Com- 
merce Association  Arbitration  No.   13 A,   1920). 


METHODS  207 

Arbitration  Methods  of  Various 
Commercial  Bodies. 

In  the  commercial  world,  merchants  have  banded  together  in 
numerous  trade  associations,  boards  of  trade  and  chambers  of  commerce. 
Usually  these  are  private  corporations  the  object  of  which  is  to  afford 
groups  of  individuals  a  common  meeting  ground  for  the  purpose  of 
carrying  on  trade,  and  no  such  organization  is  modernly  conducted 
unless  it  provides  a  method  for  settling  by  arbitration  disputes  that 
arise  in  trade. 

The  man  in  commerce  is  confronted  with  the  question,  "Must  I 
take  delivery  of  the  goods  tendered?"  or  " Must  I  make  delivery  of 
the  goods  under  contract?"  It  is  vital  that  he  obtain  a  definite  deter- 
mination of  the  issue,  for  time  is  the  essence  of  the  matt<er.  In  Uie  case 
of  goods  subject  to  a  wide  range  of  fluctuation  in  price  it  is  necessary, 
if  losses  are  to  be  avoided,  that  a  positive,  if  unpolished  answer  be 
given.  Hence  it  is  that  commercial  bodies  have  erected  their  own 
forums,  where  prompt  action  is  the  rule.  Technicalities  are  swept 
aside.  The  question  to  be  decided  usually  is  stated  witji  certainty, 
clarity  and  directness.  Facts  are  essential.  Equivocation  is  given  short 
shrift.  And  in  a  vast  majority  of  cases  it  is  evident  that  equity  is  done 
since  arbitration  is  favored  by  reputable  merchants  who  seek  an  end 
to  unprofitable,  prolonged  and  provocative  controversy.  Rarely  are 
arbitrators  in  commercial  disputes  called  upon  to  decide  questions  of 
law.  When  the  issue  involves  such  questions  usually  they  are  left  to 
the  determination  of  the  courts  and  legal  profession. 

The  question  often  is  asked,  "Of  what  binding  force  and  effect  are 
arbitrations  unless  conducted  under  the  statute?"  Within  trade  or- 
ganizations and  commercial  bodies  the  decisions,  awards  and  findings 
of  arbitrators,  in  ninety-nine  out  of  a  hundred  cases,  are  complied 
with  immediately.  Some  organizations  have  a  method  of  appeal  from  a 
decision  to  another  committee  invested  with  power  to  ratify,  modify 
or  reverse  the  award  of  the  original  arbitrators,  and  a  dissatisfied  party 
has  the  right  of  invoking  the  appeal.  Upon  final  decision,  however, 
prompt  compliance  is  necessary,  else  the  recalcitrant  party  invite 
punitive  action  on  the  part  of  the  body  before  which  the  arbitrament 
has  been  held,  and  if  he  be  a  member  thereof,  he  maybe  either  sus- 
pended or  expelled  for  non-compliance  therewith.  No  reputable  business 
man  desires,  nor^can  long  withstand,  the  opprobrium  of  having  repudiated 
an  arbitration  award  of  his  fellows  in  trade  after  pledging  his  honor  to 
be  bound  by  such  award.    The  records  of  more  than  three  thousand 


268  COMMERCIAL  ARBITRATION 

arbitrations  with  which  the  authors  are  intimately  familiar  will  not 
disclose  more  than  a  score  of  such  instances  of  repudiation  and  only  in 
very  rare  cases  has  it  been  necessary  to  exercise  the  power  of  expulsion 
by  the  leading  organizations  that  have  placed  arbitration  foremost 
among  their  activities.  Indeed,  experience  has  shown  that  business 
is  on  a  more  elevated  plane,  with  a  smaller  percentage  of  contentions, 
repudiations  of  contracts  and  generally  a  higher  regard  for  the  equitable 
rights  of  the  parties  in  those  branches  of  commerce  which  have  educated 
the  trade  to  the  soundness  and  fairness  of  adjustment  of  disputes  by 
disinterested  arbitration,  which  insures  speedy  settlement,  at  the  least 
possible  expense,  and  leaves  the  parties  to  the  pursuit  of  their  more 
profitable  and  desirable  occupations. 

In  making  a  submission  to  a  commercial  body  of  any  dispute, 
parties  to  the  arbitration  should  bear  in  mind  that  various  methods 
are  employed  and  certain  rules  and  regulations  established,  with  which 
there  must  be  substantial  compliance.  None  of  the  methods  is  either 
involved  or  intricate,  the  idea  of  trade  bodies  being  to  make  simple 
and  readily  accessible  to  business  men  a  method  of  prompt  relief. 
Nevertheless,  it  is  essential  that  the  initial  steps  be  taken  in  order  to 
facilitate  the  hearing  and  expedite  the  award. 

Herewith  are  published  the  rules  of  some  of  the  leading  trade 
organizations  and  Chambers  of  Commerce  in  the  United  States  for  the 
guidance  of  persons  desiring  to  avail  themselves  of  arbitration  under  the 
jurisdiction  of  such  organizations. 

An  examination  of  the  methods  of  arbitration  adopted  by  various 
trade  bodies  will  enable  the  business  man  readily  to  make  a  submission 
to  such  organization  as  he  may  select  as  the  forum  for  adjudicating  his 
differences.  Likewise,  attorneys  will  be  better  able  to  serve  their 
clients  by  having  information  as  to  the  rules  under  which  they  may 
be  called  uoon  to  submit  for  clients. 

CHAMBER  OF  COMMERCE  OF  THE  STATE  OF 

NEW  YORK. 

This  organization  was  the  first  in  America  to  make  available  to 
merchants  the  services  of  an  arbitration  committee.  From  1768  to  the 
present  time,  this  body  has  been  an  earnest  advocate  of  arbitration, 
and  in  all  those  years,  with  only  a  brief  interruption,  its  committee  on 
Arbitration  and  committee  on  Appeal  have  been  functioning.  To  the 
initiation  and  industry  of  its  officers  also  we  may  attribute  the  reforma- 
tion in  the  law  of  New  York  whereby  an  agreement  to  arbitrate  is 
enforceable  like  any  other  provision  of  a  contract,  and  such  agreement 
is  non-revocable. 


METHODS  269 

Therefore,  the  method  of  arbitration  in  use  by  the  Chamber  of 
Commerce  of  the  State  of  New  York  is  the  result  of  many  years'  prac- 
tical development,  and  is  and  has  been  effective  for  the  particular 
purposes  for  which  it  was  designed. 

The  by-laws  of  the  Chamber  of  Commerce  of  the  State  of  New 
York  provide  that  the  Committee  on  Arbitration  shall  have  complete 
supervision  of  all  matters  of  arbitration  referred  to  the  Chamber  and 
shall  make  rules  and  regulations  for  the  conduct  and  disposition  of  all 
matters  submitted  in  arbitration;  it  shall  provide  a  form  of  agreement 
not  inconsistent  with  existing  provisions  of  law  by  which,  so  far  as 
practicable,  the  decision  of  the  arbitrator  or  arbitrators  shall  become  as 
effective  as  a  judgment  of  the  Supreme  Court.    The  by-laws  provide: 

"It  shall  compile  and  from  time  to  time,  revise  and  keep  a  list  of 
qualified  persons,  not  less  than  fifty,  willing  to  act  as  arbitrators  under 
these  rules,  who  shall  be  members  of  the  Chamber.  This  list  shall  be 
known  as  the  List  of  Official  Arbitrators  of  the  Chamber  of  Commerce. 

"Any  matter  in  controversy  may  be  referred  by  the  disputants 
signing  the  form  of  agreement  provided  by  the  Committee,  together 
with  a  stipulation  to  the  effect  that  they  will  abide  by  the  decision  of 
the  arbitrator  or  arbitrators,  by  them  selected,  and  waiving  any  and 
all  right  to  withdraw  from  such  submission  after  the  acceptance  of 
their  appointment  by  the  arbitrator  or  arbitrators  selected,  and  desig- 
nating at  their  option  either 

"(a)  One  of  the  persons  named  in  said  'List  of  Official  Arbitrators/ 
who  shall  act  as  sole  arbitrator;  or 

"(b)  Any  two  person  to  act  as  arbitrators,  who  in  turn  shall  desig- 
nate from  said  'List  of  Official  Arbitrators,'  a  third  person  to  be 
associated  with  them  as  arbitrators;  or 

"(c)  The  Committee  on  Arbitration  of  the  Chamber  of  Commerce 
or  a  quorum  thereof. 

"In  any  case  the  Committee  on  Arbitration  may,  in  its  discretion, 
decline  to  entertain  a  matter  submitted  for  arbitration,  in  which  event 
the  selection  of  special  Arbitrator  or  Arbitrators  shall  be  void. 

"The  Committee  on  Arbitration  shall,  from  time  to  time,  establish 
a  schedule  of  moderate  fees  to  be  paid  in  all  matters  submitted,  which 
fees  shall  be  chargeable  as  decided  by  the  arbitrators. 

"The  Secretary  of  the  Chamber  of  Commerce  shall  be  the  Clerk  of 
the  Committee  on  Arbitration." 

The  following  is  the  form  of  oath  administered  to  the  arbitrators: 
"We,   the  undersigned,   do   each  for  ourselves  solemnly 
swear  that  we  will  faithfully  perform  the  duties  of  a  member 
of  the  Committee  on  Arbitration  of  the  Chamber  of  Commerce 


270  COMMERCIAL  ARBITRATION 

of  the  State  of  New  York,  and  faithfully  and  fairly  hear  and 
examine  all  matters  in  controversy  submitted  to  us  as  members 
of  said  Committee  under  the  provisions  of  law  authorizing 
said  submission,  and  to  make  a  just  award  according  to  the 
best  of  our  understanding." 
The  following  rules  and  regulations  govern  arbitrations  before 
this  body: 

RULES   AND    REGULATIONS 
I. 

All  submissions  shall  be  in  proper  form  and  a  copy  filed  with  the 
clerk,  duly  acknowledged  before  a  notary  or  other  authorized  official 
as  required  by  law,  together  with  sufficient  evidence  of  proof  of  authority 
in  the  case  of  an  agency,  partnership  or  corporation, 

(a)  If  signed  by  an  agent,  duly  authenticated  copy  of  his  power 
of  attorney; 

(b)  If  signed  by  one  or  more  partners,  written  consent  from 
co-partners  not  signing  submission; 

(c)  If  signed  in  behalf  of  a  corporation,  duly  certified  copy  of 
resolution  authorizing  submission. 

II. 
The  proceedings  shall  not  be  public  unless  requested  by  the  parties. 
Members  of  the  Committee  on  Arbitration  may  be  present  at  any  of< 
the  hearings.    The  records  shall  be  open  at  all  times  to  members  of  the 
Chamber  of  Commerce  and  others  upon  the  written  order  of  the  Com- 
mittee on  Arbitration. 

III. 
The  hearing  of  cases  shall  commence  as  soon  as  practicable  after 
submission,  and  shall  be  pressed  to  speedy  termination. 

IV. 

All  irrelevant  or  unimportant  matters  shall  be  excluded. 

V. 

The  Arbitrators  shall  construe  these  rules  and  the  submission  to 
them  as  being  designed  to  secure  reason  and  equity  in  matters  of  trade 
and  commerce,  with  the  least  possible  expenditure  of  time,  energy  and 
money  and  in  such  manner  as  to  avoid  all  unnecessary  irritation. 

VI. 

If  three  Arbitrators  are  chosen,  the  one  chosen  from  the  "List  of 
Official  Arbitrators"  shall  act  as  Chairman. 

VII. 

Each  party  to  the  Arbitration  shall  be  entitled  to  a  copy  of  the 
award. 


METHODS  271 

VIII. 

The  Chamber  of  Commerce  will  provide  the  parties  who  submit  to 
Arbitration  under  its  rules,  with  adequate  room  and  all  necessary 
forms  and  papers  free  of  charge,  and  through  its  Committee  on  Arbitra- 
tion, will  endeavor  to  do  or  cause  to  be  done  all  such  acts  as  it  properly 
may  do  for  the  purpose  of  assisting  the  parties  and  the  Arbitrators  in 
the  course  of  an  Arbitration. 

IX. 

Each  party  shall  furnish  his  own  witnesses,  paying  the  fees  thereof. 

X. 

A  competent  stenographer  shall  be  employed,  and  the  expense  for 
this  service  is  to  be  charged  against  the  parties  to  the  submission  as  the 
Arbitrators  may  decide. 

XL 

In  case  of  any  misunderstanding  or  any  question  concerning  the 
interpretation  of  these  Rules  and  Regulations,  the  decision  of  the 
Committee  on  Arbitration  of  the  Chamber  of  Commerce,  shall  be 
accepted  by  the  parties  as  conclusive. 

XII. 

Wherever  the  word  'Tarty  or  Parties"  is  used  in  these  rules  it 
shall  refer  to  the  parties  to  the  submission,  and  whenever  the  word 
'Arbitrator"  or  "Arbitrators"  is  used  it  shall  refer  to  the  Arbitrator 
or  Arbitrators  as  the  case  may  be,  whether  there  are  one  or  more. 
Whenever  the  word  "Committee"  is  used,  it  shall  refer  to  the  Com- 
mittee on  Arbitration  of  the  Chamber  of  Commerce.  Whenever  the 
word  "Clerk"  is  used,  it  refers  to  the  Clerk  of  the  Committee  on 
Arbitration. 

FEES. 

All  fees  of  Arbitrators,  expense  for  stenographers  and  other  minor 
expenses  shall  be  awarded  as  the  Arbitrators  may  decide. 

DEPOSIT. 

The  parties  to  the  submission  shall  each  deposit  with  the  Clerk  at 
the  time  of  filing  the  submission,  the  sum  of  $60.00 — or  at  the  discretion 
of  the  Committee,  a  larger  amount — which  shall  be  disbursed  by 
him  for  their  account  in  payment  of  Arbitrators'  and  stenographers' 
fees  and  minor  expenses: 

(a)  Arbitrators'  fees:     $10.00  per  day  or  part  thereof; 

(b)  Stenographers'  fees:     The  usual  remuneration. 

(Note. — The  fees  for  stenographer  are  based  on  the  following: 
25  cents  per  folio  of  10  lines,  and  5  cents  per  folio  each  for  the  second 
and  third   copies.) 


272  COMMERCIAL  ARBITRATION 

If  the  deposit  appears  insufficient  to  the  clerk,  or  becomes  ex- 
hausted, he  shall  call  upon  the  parties  equally  for  such  further  sums 
as  may  be  required:  Any  balance  to  be  refunded  as  the  Arbitrators 
may  decide. 

THE    CLERK. 

The  duties  of  the  Clerk  of  the  Committee  on  Arbitration  shall 
be  as  follows: 

He  shall  receive  and  file  all  submissions,  all  copies  of  awards,  give 
notice  of  all  hearings,  keep  a  docket  of  all  cases,  and  such  other  books 
and  memoranda  as  the  Committee  shall  from  time  to  time  direct. 
He  shall  render  all  necessary  assistance  to  the  Arbitrators,  attend  to 
their  clerical  work;  receive  and  disburse  all  fees  and  costs  and  keep 
careful  and  accurate  account  thereof,  under  the  supervision  of  the 
Committee  on  Arbitration. 

If  the  clerk  of  the  Committee  on  Arbitration  is  unable  to  attend, 
the  Assistant  Secretary  of  the  Chamber  of  Commerce  shall  take  his 
place. 

AMENDMENTS. 

The  Committee  reserves  full  power  to  amend,  add  to  or  omit  any 
of  these  rules  from  time  to  time,  as  may  be  found  expedient. 

The  "List  of  Official  Arbitrators"  is  revised  whenever  necessary. 
The  list  contains  the  names  of  several  hundred  persons,  recognized 
leaders  in  New  York  among  the  special  businesses  for  which  they 
have  consented  to  act.  This  list  can  be  obtained  from  the  Secretary, 
Chamber  of  Commerce  of  the  State  of  New  York,  65  Liberty  Street, 
New  York  City. 

FOREIGN    COMMERCE    ASSOCIATION    OF    THE    PACIFIC 

COAST. 

Arbitration  is  provided  for  by  the  Foreign  Commerce  Association 
of  the  Pacific  Coast,  and  to  the  extent  that  a  member  may  be  expelled 
for  refusing  to  arbitrate  a  dispute  arising  out  of  the  Association's 
Uniform  Contract,  submission  to  arbitration  on  the  part  of  members 
is  compulsory.  A  member,  however,  must  have  been  a  principal  in  his 
contractual  relation  with  the  other  party,  for  if  he  shall  have  acted  in 
the  capacity  of  an  agent  for  a  revealed  principal,  he  will  not  be  com- 
pelled to  arbitrate  in  place  and  stead  of  the  principal;  this  for  the 
reason  that  an  agent,  when  acting  for  a  disclosed  principal,  has  no 
power  to  submit  to  arbitration  without  express  authority  from  the 
principal,  and  if  the  agent  acts  without  authority  he  would  bind  only 
himself  as  a  principal,  and  an  adverse  award  would  be  enforceable 
against  the  agent. 


METHODS  273 

The  method  of  submission  and  procedure  in  arbitration  in  the 
Foreign  Commerce  Association  of  the  Pacific  Coast  mark  a  departure 
from  those  customarily  followed  by  various  trade  organizations. 

The  usual  form  of  arbitration  agreements  are  executed  by  the 
parties,  who  may  do  so  jointly  or  severally.  Both  parties  then  submit 
their  respective  contentions  in  writing  to  the  Chairman  of  the  Associa- 
tion, who  is  the  executive  officer  thereof.  After  both  parties  have  filed 
t  heir  written  statements,  the  Chairman  sends  to  each  the  statement  of 
the  other,  and  each  has  the  opportunity  to  answer  the  other.  The 
original  statement  and  the  replies  thereto  are  submitted  to  three  dis- 
interested arbitrators,  the  utmost  care  being  taken  to  delete  all  names 
and  identification  marks  from  the  papers  so  that  the  identity  of  the 
parties  to  the  arbitrament,  so  far  as  the  arbitrators  are  concerned,  is 
concealed.  The  arbitrators  are  appointed  by  the  Chairman  with  a  view 
to  their  especial  qualification  for  the  particular  issue  submitted.  Ob- 
viously personal  appearance  or  presentation  is  not  permitted,  except 
in  extraordinary  cases,  and  then  it  follows  as  of  course  that  the  identity 
of  the  parties  is  revealed. 

The  object  of  this  effort  at  secrecy  is  to  prevent  any  possibility  of 
favoritism  as  between  members  and  non-members.  While  it  is  true 
that  arbitrators  are  men  of  integrity  and  give  to  the  cause  their 
honest,  independent  consideration  and  render  awards  consonant  with 
sound  justice  and  equity,  the  party  resident  abroad  or  in  another 
section  of  the  United  States,  may  be  of  the  opinion  that  his  interests 
might  be  prejudiced,  the  effort  to  conceal  the  identity  of  the  parties 
until  after  award  made  must  tend  to  convince  him  that  a  sincere 
attempt  is  made  to  adjudge  the  matter  on  its  strict  merits  and  decide 
accordingly. 

The  plan  of  refusing  the  parties  the  right  of  personal  appearance 
was  prompted  by  the  same  spirit  of  fairness,  for  it  goes  without  saying 
that  a  party  to  an  arbitrament  who  has  his  abode  thousands  of  miles 
from  the  place  of  consideration  would  not  have  the  same  opportunity 
of  adequate  representation  before  arbitrators  as  one  residing  at  the 
place  of  arbitration. 

Hence,  by  denying  all  the  opportunity  to  be  represented  in  person 
or  by  attorney,  and  requiring  each  party  to  an  arbitration  to  present 
his  case  in  writing,  by  concealing  from  the  arbitrators  the  true  identity 
of  the  parties  at  interest  until  after  award  made,  and  by  the  exercise 
of  the  greatest  care  to  bring  out  the  issues  as  raised  under  the 
submission,  this  Association  has  proved  the  efficacy  of  this  method  of 
procedure.  No  matter  where  the  parties  are  domiciled  their  interests 
are  fairly  presented  and  honestly  considered. 


274  COMMERCIAL  ARBITRATION 

The  foregoing  fully  explains  the  procedure  followed  by  the  Foreign 
Commerce  Association  of  the  Pacific  Coast. — H.  A.  D. 
The  following  rules  govern  arbitrations : 

Rule  100.  When  arbitration  under  these  rules  is  applied 
for  by  either  party  to  a  contract  such  arbitration  shall,  in  the 
absence  of  agreement  to  the  contrary,  be  held  before  the 
Foreign  Commerce  Association  of  the  Pacific  Coast.  Such 
arbitration  may,  at  the  option  of  the  parties,  be  held  at  either 
the  San  Francisco  or  Seattle  office  of  the  Association.  In  the 
event  the  parties  fail  to  designate  the  place,  or  if  they  fail  to 
agree  thereon,  the  Chairman  of  the  Association  shall  designate 
the  place  of  arbitration. 

Rule  101.  All  communications  relative  to  arbitration  shall 
be  addressed  to  the  Foreign  Commerce  Association  of  the 
Pacific  Coast  at  Seattle  or  San  Francisco. 

Rule  102.  Three  arbitrators  shall  serve  on  each  case 
and  the  agreed  decision  of  any  two  shall  be  binding  on  all 
parties.  The  dissenting  arbitrator  shall,  however,  sign  as 
dissenting  thereto  and  may  give  reasons  therefor. 

Rule  103.  The  fee  in  all  cases  of  arbitration  shall  be 
$50.00,  which  amount  shall  be  deposited  with  the  Foreign 
Commerce  Association,  by  each  party  together  with  applica- 
tion for  arbitration,  but  the  party  in  whose  favor  decision  is 
rendered  shall  be  entitled  to  a  return  of  his  deposit  when  the 
findings  are  forwarded  to  him. 

Rule  104.  The  following  is  the  form  of  request  for 
arbitration : 

"The  undersigned  hereby  requests  that  an  arbitration  be 

held  at 

before  the  Foreign  Commerce  Association  of  the  Pacific 
Coast,  and  under  the  rules  of  said  Association,  in  the  matter  of 

and  hereby  agrees  and  promises  absolutely  to  abide  by  the 
award  and  findings  of  the  arbitrators,  and  in  the  event  of  an 
adverse  decision,  to  make  prompt  settlement  and  likewise  pay 
the  fees  and  costs  as  provided  for  in  the  Rules  of  said  Associa- 
tion. 

"Check  for  $50.00  for  deposit  on  account  of  said  arbitration 
fee  enclosed  herein." 

(Signed)      

By 


METHODS  275 

Rule  105.  Written  statements  of  fact,  together  with 
written  arguments  thereon,  must  be  presented  in  quadruplicate 
to  the  Foreign  Commerce  Association  of  the  Pacific  Coast, 
which  shall  be  submitted  in  their  entirety  to  the  arbitrators, 
but  no  oral  evidence  shall  be  given  unless  requested  by  the 
arbitrators. 

Rule  106.  Immediately  upon  receipt  thereof,  the  Chair- 
man of  the  Association  shall  submit  a  copy  of  the  statement 
of  fact  to  the  respective  parties  to  the  arbitration,  and  each 
shall  have  the  right  to  reply  thereto,  but  if  no  such  answer 
is  made  by  either  party  within  a  reasonable  time,  it  shall  be 
considered  a  waiver  of  the  right  of  answer.  Provided,  there 
shall  be  no  interchange  by  the  Chairman  of  any  exhibits 
submitted  in  connection  with  any  statement  of  fact. 

Rule  107.  Sample,  if  required,  shall  be  drawn  and 
forwarded  to  the  Association  in  accordance  with  the  Rules 
covering  the  commodity  in  dispute.  In  the  event  parties  to  an 
arbitration  disagree  as  to  the  sample  or  samples  to  be  used  for 
arbitration,  the  Arbitration  Board  shall  obtain  same  in  such 
manner  as  it  shall  elect.  The  losing  party  shall  bear  any  and 
all  expense  connected  with  taking  and  forwarding  samples. 

Rule  108.  The  findings  and  award  of  the  arbitrators 
shall  be  in  writing,  signed  by  the  arbitrators,  fully  setting 
forth  the  facts  of  the  case  and  a  copy  thereof  shall  immediately 
be  furnished  the  parties  to  the  dispute. 

Rule  109.  When  arbitration  finding  is  based  upon 
samples,  the  sample  on  which  arbitration  was  held  shall, 
on  immediate  request,  be  returned  to  the  owner  at  his  expense. 

Rule  110.  A  member  of  the  Association  who  refuses  to 
submit  to  the  Association  any  dispute  arising  out  of  a  contract 
providing  for  arbitration  under  the  Rules  of  this  Association, 
or  who  fails  or  refuses  within  a  reasonable  time  to  abide  by 
the  findings  and  award  of  the  arbitrators,  except  in  case  of  an 
appeal,  shall  be  reported  to  the  Advisory  Committee  by  the 
Chairman  and  such  committee  shall  have  power  to  act  in  such 
manner  as  the  facts  warrant,  and  may  suspend  or  expel  such 
member,  reporting  such  action  to  the  membership. 

Rule  111.  .  An  appeal  from  any  decision  of  arbitrators  may 
be  made  to  a  Board  of  Appeal  of  this  Association,  no  member 
of  which  shall  have  been  an  arbitrator  in  the  matter  appealed 
from.    Notice  of  such  appeal  shall  be  given  within  three  full 


276  COMMERCIAL  ARBITRATION 

business  days  after  receipt  of  official  copy  of  findings  and 
award,  and  shall  be  accompanied  by  a  certified  check  in  the 
sum  of  $250.00,  which  sum  shall  be  retained  by  the  Association 
if  decision  of  arbitrators  is  upheld,  and  returned  if  not  upheld. 
If  decision  of  arbitrators  fixed  a  sum  of  money  to  be  paid  by 
appellant,  a  certified  check  in  the  sum  so  fixed,  payable  to 
the  Foreign  Commerce  Association  of  the  Pacific  Coast  or 
order,  shall  accompany  the  notice  of  appeal.  If  decision 
of  arbitrators  is  upheld,  check  shall  be  paid  to  the  party  in 
whose  favor  the  original  award  was  made,  and  if  decision 
is  reversed  check  shall  be  returned  immediately  to  appellant. 
All  expenses  incurred  by  the  Board  of  Appeal  may  at  the 
Board's  option,  be  assessed  against  the  losing  party. 

Rule  112.  The  arbitrators  shall  receive  for  their  services 
from  the  Association  such  portion  of  the  arbitration  fee  as  the 
Association  may  provide. 

NEW  YORK  PRODUCE  EXCHANGE. 

The  New  York  Produce  Exchange  is  empowered  by  its  charter  to 
elect  five  members  of  the  Exchange  as  a  committee  to  be  known  and 
styled  "The  Arbitration  Committee  of  the  New  York  Produce  Ex- 
change." It  shall  be  the  duty  of  the  Arbitration  Committee  to  hear 
and  decide  any  controversy  which  may  arise  between  the  members 
of  the  Association,  or  any  person  claiming  by,  through,  or  under  them, 
and,  as  may  be  voluntarily  submitted  to  the  committee  for  arbitration : 
and  such  members  and  persons  may,  by  an  instrument  in  writing, 
signed  by  them  and  attested  by  a  subscribing  witness,  agree  to  submit 
to  the  decision  of  such  committee  any  such  controversy  which  might 
be  the  subject  of  an  action  at  law,  or  in  equity,  except  claims  of  title 
to  real  estate  or  to  any  interest  therein,  and  that  a  judgment  of  the 
Supreme  Court  shall  be  rendered  upon  the  award  made  pursuant  to 
such  submission. 

Such  Arbitration  Committee,  or  a  majority  of  them,  shall  have 
power  to  appoint  a  time  and  place  of  hearing  of  any  such  controversy, 
and  adjourn  the  same  from  time  to  time  as  may  be  necessary,  not 
beyond  the  day  fixed  in  the  submission  for  rendering  their  award, 
except  by  consent  of  parties;  to  issue  subpoenas  for  the  attendance  of 
witnesses  residing  or  being  in  the  Metropolitan  Police  District.  AH 
the  provisions  contained  in  Title  14,  Part  3d,  Chapter  8,  of  the  Revised 
Statutes,  and  all  acts  amendatory  or  in  substitution  thereof,  relating 
to  issuing  attachments  to  compel  the  attendance  of  witnesses,  shall 


METHODS  277 

apply  to  proceedings  had  before  the  Arbitration  Committee.  Witnesses 
so  subpoenaed  as  aforesaid  shall  be  entitled  to  the  fees  prescribed  by  law 
for  witnesses  in  the  Courts  of  Justice  of  the  Peace. 

Any  number  not  less  than  a  majority  of  all  the  members  of  the 
Arbitration  Committee  shall  be  competent  to  meet  together  and  hear 
the  proofs  and  allegations  of  the  parties,  and  an  award  by  a  majority  of 
those  who  shall  have  been  present  at  the  hearing  of  the  proofs  and 
allegations  shall  be  deemed  the  award  of  the  Arbitration  Committee, 
and  shall  be  valid  and  binding  on  the  parties  thereto.  Such  award 
shall  be  made  in  writing,  subscribed  by  the  members  of  the  committee 
concurring  therein,  and  attested  by  a  subscribing  witness.  Upon  filing 
the  submission  and  award  in  the  office  of  the  clerk  of  the  Supreme 
Court  of  the  City  and  County  of  New  York,  both  duly  acknowledged 
or  proved  in  the  same  manner  as  deeds  are  required  to  be  acknowledged 
or  proved  in  order  to  be  recorded,  a  judgment  may  be  entered  therein 
according  to  the  award,  and  shall  be  docketed,  transcripts  filed,  and 
executions  issued  thereon,  the  same  as  authorized  by  law  in  regard  to 
judgments  in  the  Supreme  Court.  Judgments  entered  in  conformity 
with  such  award  shall  not  be  subject  to  be  removed,  reversed,  modified, 
or  in  any  manner  appealed  from  by  the  parties  thereto,  except  for 
frauds,  collusion,  or  corruption  of  said  Arbitration  Committee,  or  some 
member  thereof. 

The  By-laws  of  the  Produce  Exchange  provide : 

Sec.  28.  As  soon  as  practicable  after  the  election  of  the 
Arbitration  Committee,  the  members  thereof  shall  organize 
by  the  election  of  a  chairman  from  among  their  own  number. 
The  Secretary,  either  in  person  or  by  substitute,  shall  act 
as  clerk  of  the  Committee.  Before  entering  upon  the  duties 
of  their  office,  the  members  of  the  said  Committee  shall  be 
required  to  take  or  subscribe  to  the  following  oath  or  affirma- 
tion, viz: 

"You  do  severally  swear  that  you  respectively  will  faith- 
fully and  fairly  hear  and  examine  the  matters  in  controversy 
which  may  come  before  you  during  your  tenure  in  office, 
and  to  make  a  just  award  therein,  according  to  the  best  of 
your  understanding,   so  help  you  God." 

Sec.  29.  All  persons  who  may  desire  the  services  of  the 
Arbitration  Committee  shall  file  with  the  Secretary  of  the 
Exchange  an  agreement  in  writing  to  submit  their  case  to  the 
Committee,  and  to  be  bound  by  its  decision,  which  agreement 
shall  be  signed  by  the  parties  thereto,  and  attested  by  a 
subscribing  witness.     On  the  filing  of  such  agreement  the 


278  COMMERCIAL  ARBITRATION 

Secretary  shall  call  a  meeting  of  the  Committee,  to  be  held 
as  soon  thereafter  as  may  be  convenient  to  the  parties  con- 
cerned, to  hear  and  decide  such  controversy.  The  Committee 
shall  have  power  to  adjourn  the  hearing  of  any  case  from 
time  to  time,  as  circumstances  may  require.  All  awards  by 
said  Committee  shall  be  rendered  in  conformity  with  Sections 
5,  6,  and  7  of  the  Charter. 

Sec.  30.  The  proceedings  of  the  Arbitration  Committee 
shall  be  recorded  in  a  book  to  be  kept  for  that  purpose,  in 
which  shall  be  entered  a  summary  of  each  controversy  sub- 
mitted for  the  decision  of  the  Committee  and  the  award  made 
thereon.  Said  book  shall  be  the  property  of  the  Exchange, 
and  subject  to  the  inspection  of  its  members  on  application 
to  the  Secretary. 

Sec.  31.  Each  member  of  the  Arbitration  Committee  who 
shall  be  present  at  the  hearing  of  any  case  shall  be  entitled 
to  a  fee  of  five  dollars  for  each  sitting;  to  be  paid  by  the  party 
against  whom  the  decision  shall  be  rendered,  except  in  such 
cases  as  the  Committee,  at  their  discretion,  shall  otherwise 
order. 

CHICAGO  BOARD  OF  TRADE. 

Under  the  by-laws  of  the  Board  of  Trade  of  the  City  of  Chicago, 
Committees  of  Reference  and  Arbitration  and  Committees  of  Appeal 
are  authorized  for  the  settlement  of  such  matters  of  difference  as  may 
be  voluntarily  submitted  by  members  or  non-members.  The  acting 
chairman  of  either  of  said  committees,  when  sitting  as  arbitrators, 
may  administer  oaths  to  the  parties  and  witnesses,  and  issue  subpoenas 
and  attachments,  compelling  the  attendance  of  witnesses,  the  same  as 
Justices  of  the  Peace,  and  in  like  manner  directed  to  any  constable  to 
execute.     The  charter  provides  as  follows: 

"When  any  submission  shall  have  been  made  in  writing, 
and  a  final  award  shall  have  been  rendered,  and  no  appeal 
taken  within  the  time  fixed  by  the  Rules  or  By-laws,  then, 
on  filing  such  award  and  submission  with  the  Clerk  of  the 
Circuit  Court-,  an  execution  may  issue  upon  such  award  as 
if  it  were  a  judgment  rendered  in  the  Circuit  Court,  and  such 
award  shall  thenceforth  have  the  force  and  effect  of  such  a 
judgment,  and  shall  be  entered  upon  the  judgment  docket 
of  said  court. " 
The  rules  governing  arbitration  provide: 

Section  1.  It  shall  be  the  duty  of  the  Committee  of 
Arbitration  to  hear  and  determine  all  cases  of  disputed  claims 


METHODS  279 

voluntarily  submitted  for  their  adjudication  by  members 
of  the  Association.  All  evidence  in  such  cases  shall  be  taken 
under  oath  or  affirmation,  except  documentary  evidence, 
which  shall  be  sworn  to,  if  demanded  by  either  party  and 
the  committee  decide  it  to  be  necessary,  and  shall  be  duly 
recorded.  In  all  such  adjudications  the  committee  shall 
construe  all  Rules,  Regulations  and  By-laws  of  the  Asso- 
ciation as  being  designed  to  secure  justice  and  equity  in 
trade;  and  all  awards  or  findings  shall  be  made  in  conformity 
therewith. 

In  case  either  party  shall  so  demand,  by  previous  notice 
given  to  the  Secretary,  the  testimony  and  proceedings  of  the 
Committee  of  Arbitration  shall  be  taken  by  a  stenographer,  the 
cost  of  which  shall  be  assessed  by  the  committee  as  in  cases  of 
other  costs  incurred. 

Sec.  2.  Any  award  or  finding  of  the  Committee  of  Arbi- 
tration may  be  appealed  from,  and  the  case  may  be  carried 
to  the  Committee  of  Appeals  for  revision;  provided,  notice 
of  such  appeal  shall  be  given  to  the  Secretary,  in  writing, 
within  two  business  days  after  such  award  or  finding  shall  have 
been  delivered  to  the  parties  in  controversy. 

Sec.  3.  It  shall  be  the  duty  of  the  Committee  of  Appeals 
to  review  such  cases  as  may  be  appealed  from  the  Committee 
of  Arbitration  and  formally  brought  before  it,  and  its  awards 
or  findings  shall  be  final  and  binding,  and  shall  not  be  subject 
to  revision  by  any  other  tribunal  of  the  Association;  pro- 
vided, the  Board  of  Directors  may  determine  from  the  record 
and  other  evidence,  as  to  the  proper  constitution  of  any 
committee  and  as  to  the  regularity  of  its  proceedings.  The 
said  Committee  of  Appeals  shall  receive  such  new  evidence 
as  may  be  offered  under  oath  or  affirmation;  and  if,  in  its 
judgment,  evidence  is  produced  which  will  justify  a  rehearing 
of  the  case  by  the  Committee  of  Arbitration,  it  shall  remand 
the  case  to  the  said  Committee  of  Arbitration  for  a  new  trial. 
Any  final  award  or  finding  of  the  Committee  of  Appeals 
shall  be  based  on  the  record  of  the  Committee  of  Arbitration, 
and  shall  be  made  in  like  manner  as  prescribed  by  Section  1  of 
this  Rule. 

Sec.  4.  Five  of  either  of  these  committees  shall  be  a 
quorum  for  the  transaction  of  business,  and  a  majority  decision 
of  such  quorum  shall  be  binding. 

Sec.  5.     The  Committee  of  Arbitration  and  the  Committee 


280  COMMERCIAL  ARBITRATION 

of  Appeals  shall  each  render  their  awards  or  findings  in  writing, 
through  the  Secretary  of  the  Association,  within  two  business 
days  after  their  decisions  shall  have  been  made.  Such  awards 
or  findings  shall  be  signed  by  the  Chairman  of  the  Committee 
and  shall  be  certified  by  the  Secretary  under  the  seal  of 
the  Association.  The  official  records  and  decisions  of  these 
committees,  and  all  other  records  of  the  Association,  may  be 
inspected  by  any  member  of  the  Association  upon  application 
to  the  Secretary. 

Sec.  6.  When,  from  absence  or  disqualification  of  regular 
members,  either  the  Committee  of  Arbitration  or  Appeals 
cannot  be  formed,  the  parties  in  controversy  shall  be  allowed 
to  fill  vacancies  with  any  member  or  members  of  the  Associa- 
tion willing  to  serve  (not  being  of  the  other  committee), 
on  whom  they  may  agree,  or,  if  such  parties  are  unwilling  to 
submit  their  case  to  the  Committee  of  Arbitration,  they  may 
choose  three  or  more  members  (willing  to  serve  and  not 
being  of  the  Committee  of  Appeals)  whom  they  may  agree 
upon;  such  agreement,  in  either  case,  to  be  communicated 
to  the  Secretary  in  writing,  signed  by  all  the  parties  in  con- 
troversy. A  majority  award  or  finding  of  any  such  committee 
shall  be  binding,  and  any  award  or  finding  of  committees 
thus  formed  shall  be  made  under  the  same  Rules,  and  shall 
have  the  same  effect  as  if  made  by  the  regular  committees, 
respectively. 

Sec.  7.  Before  entering  upon  the  duties  of  their  office  the 
members  of  any  Committee  of  Arbitration  or  Committee  of 
Appeals  shall  be  required  to  take  or  subscribe  to  the  following 
oath  or  affirmation,  viz.:  "You  do  solemnly  swear  (or  affirm) 
that  you  respectively  will  faithfully  and  fairly  hear  and 
examine  all  matters  of  controversy  which  may  come  before 
you  during  your  tenure  of  office,  and  that  you  will  in  all 
cases  make  just  and  equitable  awards  or  findings  upon  the 
same,  in  conformity  with  the  Rules,  Regulations  and  By-laws 
of  the  Association,  and  according  to  the  evidence,  to  the  best 
of  your  understanding;  so  help  you  God." 

Sec.  8.  The  Chairman  or  Acting  Chairman  of  any  Com- 
mittee of  Arbitration  or  Appeals  shall  have  power  to  administer 
suitable  oaths  to  the  parties  and  witnesses,  and  to  issue 
citations  to  witnesses. 

Sec.  9.  Parties  desiring  the  services  of  either  of  the 
foregoing  committees  shall  notify  the  Secretary  to  that  effect 


METHODS  281 

in  writing,  and,  before  the  hearing  of  the  case,  shall  file  an 
agreement  with  him,  signed  by  the  parties  to  the  controversy, 
binding  themselves  to  abide,  perform  and  fulfill  the  final 
award  or  finding  which  shall  be  made  touching  the  matter 
submitted,  without  recourse  to  any  other  court  or  tribunal. 
Neither  party  shall  postpone  the  trial  of  a  case  longer  than  ten 
days  after  it  has  been  submitted,  unless  good  cause  can  be 
shown  therefor,  satisfactory  to  the  committee.  Trifling  and 
unimportant  matters  shall  not  be  entertained  by  the  Com- 
mittee of  Arbitration.  Any  member  of  a  firm  may  execute 
said  agreement  on  behalf  of  such  firm. 

Sec.  10.  Members  of  the  Committees  of  Arbitration  and 
Appeals  failing  to  attend  when  their  services  are  required  may 
be  fined,  for  the  use  of  the  Association,  three  dollars  for 
each  default,  unless  a  satisfactory  excuse  shall  be  made  to 
the   Committee. 

Sec.  11.  The  fees  for  arbitration,  under  the  Rules,  By- 
Laws  and  Regulations  of  the  Association,  shall  be  as  follows: 
For  each   case  where  the  amount  in  controversy  shall  be 

under  $500.00 $10.00 

Where  the  amount  in  controversy  shall  be  from  $500  to 

$1,000 $15.00 

Where  the  amount  in  controversy  shall  be  from  $1,000  to 

$1,500 $20.00 

Where  the  amount  in  controversy  shall  be  from  $1,500  to 

$2,500 $25.00 

Where  the  amount  in  controversy  shall  be  from  $2,500  up- 
ward  $50.00 

The  fees  as  above,  shall  be  paid  in  advance,  to  the  Secre- 
tary, by  the  party  bringing  the  case,  and  shall  be  equally 
divided  between  the  members  of  the  Committee  hearing  the 
case. 

Sec.  12.  The  fees  of  the  Committee  of  Appeals  shall  be 
the  same  as  the  fees  in  the  same  case  before  the  Committee 
of  Arbitration;  and  they  shall  be  paid  and  disposed  of  in  the 
same  manner. 

Sec.  13.  If  parties  to  a  controversy  fail  to  appear  at 
the  time  set  for  trial,  or  request  a  postponement,  they  may 
(if  the  case  is  postponed)  be  assessed  with  costs,  by  and  for 
the  use  of  the  committee,  in  any  sum  in  the  committee's  dis- 
cretion, not  exceeding  five  dollars.  The  committee,  however, 
may  insist  that  the  trial  shall  take  place  without  postponement. 


282  COMMERCIAL  ARBITRATION 

Sec.  14.  When  neither  of  the  parties  in  the  controversy  is 
a  member  of  the  Association,  the  aforesaid  fees  may 
be  doubled.  Fees,  and  all  additional  costs  that  may  be  incurred 
in  the  investigation  of  suits,  shall  be  finally  paid  by  either  of 
the  parties  in  the  case,  as  may  be  decided  by  the  committee 
hearing  the  same,  and  shall  be  included  in  their  award  or 
finding. 

THE  NEW  ORLEANS  BOARD  OF  TRADE,   LIMITED. 

Arbitration  is  provided  for  by  the  New  Orleans  Board  of  Trade, 
Limited,  the  general  committee  on  arbitration  consisting  of  five  mem- 
bers, three  constituting  a  quorum.  Any  member  of  the  Board  of  Trade 
refusing  to  submit  to  arbitration  under  its  rules,  provided  the  amount 
at  issue,  and  claimed  as  damages  in  arbitration  other  than  on  maritime 
matters,  shall  not  exceed  $800,  and  provided  further,  that  the  amount 
at  issue  and  claimed  as  damages  in  arbitrations  on  maritime  matters 
shall  not  exceed  $1,000,  shall  be  reported  to  the  Board  of  Directors, 
and  be  by  them  tried  thereon,  and  be  suspended  or  expelled,  as  they 
may  deem  just  and  proper,  or  be  entirely  discharged.  Trifling  unim- 
portant matters  shall  not  be  entertained  by  any  committee  on  arbitra- 
tion. Any  member,  or  duly  authorized  agent,  of  a  firm  may  execute 
the  agreement  in  arbitration  on  behalf  of  said  firm. 

Section  17  of  the  by-laws  of  the  New  Orleans  Board  of  Trade, 
provides : 

"Disputes  between  members  of  the  Association  with 
persons  not  members  may  be  referred  to  and  decided  by  the 
respective  Committees  on  Arbitration;  provided,  parties  to 
such  disputes  who  are  not  members  of  the  Exchange  shall 
agree,  in  writing,  to  abide  by  the  decision  of  the  Committee, 
and  the  rules  of  the  Exchange  governing  in  such  matters, 
and  give  security,  in  advance,  to  the  member  contesting 
to  cover  any  probable  award.  All  such  cases  of  arbitration 
shall  be  taxed  the  same  fee,  to  be  paid  by  the  losing  party 
as  in  cases  arising  between  members." 

The  by-laws  provide  for  other  arbitration  committees,  as  follows: 
Maritime  Matters — Having  jurisdiction  of  all  claims,  differences  and 
controversies  between  members  of  the  Board  of  Trade  on  question 
of  ocean  freight  and  all  matters  covered  by  the  port  rules.  The  secretary 
and  each  of  the  arbitrators  shall  be  entitled  to  a  fee  of  $5.00  in  cases 
involving  $250  or  less,  and  a  fee  of  $10.00  in  cases  involving  over  $250 
for  each  and  every  sitting.  The  fees  and  other  necessary  expenses 
incident  to  taking  testimony  shall  be  paid  by  the  unsuccessful  party, 


METHODS  283 

unless  the  arbitrators  order  otherwise.  An  appeal  from  any  decision 
of  this  committee  lies  to  the  governing  committee  of  the  Maritime 
Branch  of  the  Board  of  Trade. 

Clean  and  Rough  Rice — Two  committees  having  jurisdiction  of 
cases  pertaining  respectively  to  Clean  and  Rough  Rice.  The  general 
arbitration  rules  and  the  rice  rules  govern  these  submissions.  The  fee 
is  $15.00.  Appeals  from  an  award  of  either  of  these  committees  lies  to 
the  Rice  Committee. 

Grain — Having  jurisdiction  of  disputes  arising  out  of  the  sale  and 
purchase  of  grain.  An  appeal  lies  to  the  Grain  Committee.  When 
other  questions  are  involved,  in  regard  to  export  shipments  of  grain, 
an  appeal  lies  to  the  Committee  on  Maritime  Matters. 

In  addition  to  the  foregoing  arbitration  committees  specially  pro- 
vided for  by  by-laws,  special  committees  on  arbitration,  consisting  of 
three,  as  to  specific  commodities,  are  allowed  upon  mutual  request.  An 
appeal  shall  he  to  the  standing  committee  having  jurisdiction  of  the 
commodity  at  issue. 

The  various  committees  on  arbitration  may  grant  a  new  trial  on 
such  new  evidence  as  was  not  in  the  purview  of  the  applicant  or  could 
not  have  been  obtained  by  due  diligence  at  the  time  of  the  trial,  and 
may  be  offered  under  oath  or  affirmation,  provided  such  application 
for  rehearing  is  filed  within  forty-eight  hours  after  notice  of  decision 
has  been  received. 

The  by-laws  further  provide: 

The  duties  of  the  General  Committee  on  Appeal  shall 
be  to  review  such  cases  as  may  be  appealed  from  the  General 
Committee  on  Arbitration,  and  formerly  tried  before  the 
Committee,  and  its  awards  or  findings  shall  be  final  and 
binding,  and  shall  not  be  subject  to  revision  by  any  tribunal 
of  the  Association,  provided  the  Board  of  Directors  may 
determine  from  the  record  or  other  evidence  whether  such 
Committee  was  properly  constituted  and  its  proceedings  regu- 
lar, and  in  the  event  of  the  Board  deciding  that  such  was  not  the 
case,  it  shall  have  power  to  amend  or  alter  any  award  of 
the   Corhmittee  in  question. 

Any  award  or  finding  of  any  Committee  on  Appeal  shall 
be  based  on  the  record  of  the  Committee  on  Arbitration 
that  arbitrated  the  case,  and  shall  be  made  in  like  manner. 

In  cases  of  appeal,  the  contestants  shall  have  the  privilege 
of  filing  a  brief  and  appearing  before  the  Committee  on 
Appeal,  provided  no  new  evidence  be  introduced  and  the 
argument  is  confined  to  the  record. 


284  COMMERCIAL  ARBITRATION 

If  parties  to  a  controversy  fail  to  appear  at  the  time  set 
for  trial,  or  request  a  postponement,  they  may,  in  the  Com- 
mittee's discretion,  if  the  case  is  postponed,  be  assessed  with 
costs  by  and  for  the  use  of  said  Committee  in  any  sum  not 
exceeding  the  arbitration  fee. 

The  Committee  may  insist  that  the  trial  shall  take  place 
without  postponement. 

Sec.  26.  Every  case  passed  upon  by  a  Committee  on 
Arbitration  (except  where  otherwise  provided),  when  the 
amount  at  issue  or  claimed  as  damages,  is  $100.00  or  more, 
shall  be  taxed  with  a  fee  of  $15.00  to  be  paid,  by  the  losing 
party,  $5.00  to  be  retained  by  the  Board  of  Trade  and  $10.00 
to  be  distributed  equally  to  the  members  of  the  Committee 
who  arbitrated  the  case.  When  the  amount  at  issue  or 
claimed  as  damages  is  less  than  $100.00  the  arbitration  fee 
shall  be  $5.00,  which  fee  shall  be  retained  by  the  Board  of 
Trade. 

Arbitration  fees  must  be  deposited  in  advance  with  the 
Secretary  by  the  party  bringing  the  case,  and  in  the  event 
of  the  case  being  decided  in  his  favor  the  deposit  is  to  be 
returned. 

The  fees  of  the  Committee  on  Appeal,  not  specifically 
provided  for,  shall  be  the  same  as  the  fees  in  same  cases 
before  the  Committee  on  Arbitration  from  whose  decision 
the  appeal  was  taken,  and  they  shall  be  paid  and  disposed  of 
in  the  same  manner. 

Fees  and  all  additional  costs  that  may  be  incurred  in 
the  investigation  of  suits  shall  be  finally  paid  by  either  of  the 
parties  in  the  case,  as  may  be  decided  by  the  Committee 
hearing  the  same,  and  shall  be  included  in  their  awards  or 
findings. 

The  Committees  on  Arbitration,  as  well  as  the  Committees 
on  Appeals,  shall  each  render  their  awards  or  findings  in 
writing,  through  the  Secretary  of  the  Exchange,  within  one 
business  day  after  their  decision  shall  have  been  made.  Such 
awards  or  findings  shall  be  signed  by  the  Chairman  of  the 
Committee  and  shall  be  certified  by  the  Secretary,  under 
the  seal  of  the  Exchange.  The  official  record  and  decisions 
of  these  Committees  may  be  inspected  by  any  member  of 
the  Exchange  upon  application  to  the  Secretary,  with  the 
consent  of  the  President,  his  refusal  to  be  subject  to  appeal 
to  the  Executive  Committee. 


METHODS  285 

Sec.  27.  Before  entering  upon  the  duties  of  their  offices, 
the  members  of  every  Committee  on  Arbitration,  and  every 
Committee  on  Appeal  shall  be  required  to  take  or  subscribe 
before  a  duly  authorized  official  of  the  Exchange  to  the  follow- 
ing oath  or  affirmation,  viz.: 

"You  do  solemnly  swear  (or  affirm)  that  you  respectively 
will  faithfully  and  fairly  hear  and  examine  all  matters  of 
controversy  which  may  come  before  you  during  your  tenure 
of  office,  and  that  you  will  in  all  cases  make  just  and  equitable 
awards  or  findings  upon  the  same,  and  in  conformity  with 
the  Rules,  Regulations,  and  By-Laws  of  the  Association, 
and  according  to  the  evidence,  to  the  best  of  your  under- 
standing; so  help  you  God." 

SAN  FRANCISCO  CHAMBER  OF  COMMERCE. 

The  San  Francisco  Chamber  of  Commerce  has  a  standing  arbitration 
committee  consisting  of  seven  members,  three  of  whom  constitute  a 
quorum.  The  Board  of  Directors  of  the  Chamber  may,  from  time  to 
time,  as  occasion  may  require,  elect  alternate  members  of  the  Arbitra- 
tion Committee,  who  shall  be  members  of  the  Chamber  having  a 
practical  knowledge  of  the  quality,  grade  or  value  of  any  special  com- 
modity. When  a  controversy  is  submitted  for  arbitration  and  the 
question  at  issue  relates  to  the  quality,  grade  or  value  of  a  certain 
commodity  of  which,  in  the  opinion  of  the  Chairman,  the  members 
of  the  Arbitration  Committee,  or  a  sufficient  number  thereof,  have  not 
the  requisite  practical  knowledge,  he,  said  Chairman,  subject  to  the 
approval  of  the  parties  to  the  controversy,  may  designate  one  or  more, 
but  not  exceeding  three  in  number,  of  the  Alternate  Members  of  said 
Committee,  to  serve  on  the  Arbitration  Committee  in  the  case  in 
question.  The  status  of  said  Alternate  Members  during  said  case 
shall  be  that  of  the  regular  members  with  the  same  right  to  vote  on 
the  questions  at  issue  and  to  receive  the  same  arbitration  fees. 

As  soon  as  practicable  after  their  election,  the  Arbitration  Com- 
mittee shall  elect  a  chairman  from  their  own  body.  They  shall  be 
entitled  to  the  services  of  the  Secretary  of  the  Chamber  to  act  as  clerk 
of  the  committee.  But  if  from  any  cause  he  is  unable  or  does  not  act, 
the  committee  may  appoint  a  clerk  pro  tern.  The  proceedings  of  said 
committee  shall  be  recorded  in  a  book  to  be  kept  for  that  purpose,  in 
which  shall  be  entered  a  summary  of  each  controversy  had  before 
them,  the  award  made  thereon,  and  at  the  discretion  of  the  committee, 
the  grounds  for  such  award.  Said  book  shall  be  the  property  of  the 
Chamber,  and  subject  to  the  inspection  of  its  members. 


286  COMMERCIAL  ARBITRATION 

The  by-laws  of  the  San  Francisco  Chamber  of  Commerce  provide 

Sec  3.  Members  of  the  Chamber  who  may  desire  the  services 
of  said  Committee  shall  file  with  the  Secretary  an  agreement,  in 
writing,  to  submit  their  case  to  the  Committee,  and  be  bound 
by  their  decision,  subject  to  the  right  of  appeal,  which  agree- 
ment shall  be  signed  by  the  parties  thereto,  and  attested 
by  a  subscribing  witness.  On  such  an  agreement  being  signed, 
the  Secretary  shall  call  a  meeting  of  the  Committee,  to  be 
held  as  soon  thereafter  as  may  be  convenient  to  the  parties 
concerned,  to  hear  and  decide  such  controversy.  If,  in  any 
case  submitted  to  the  Committee,  for  want  of  evidence  or 
other  causes,  it  may  conclude  it  is  out  of  its  power  to  render 
substantial  justice,  it  has  authority  to  dismiss  such  case. 
In  all  cases  the  Committee  shall  exercise  its  discretion  in 
the  matter  of  holding  and  postponing  its  sessions,  dismissing 
or  continuing  cases,  rendering  or  deferring  judgments,  and  may 
so  exercise  its  powers  generally  as  to  promote  substantial  justice. 
Should  application  for  arbitration  with  a  member  of  the 
Chamber  be  made  by  a  non-member,  the  Arbitration  Com- 
mittee may  hold  such  arbitration,  provided  assent  thereto 
is  given  by  the  member  in  question. 

Sec.  4.  The  fees  for  an  arbitration  shall  be:  Where  the 
amount  in  controversy  is  under  $1,000 — $25.  Where  the 
amount  is  from  $1,000  to  $2,000— $35.  Where  the  amount  is 
from  $2,000  to  $3,000— $45.  Where  the  amount  is  over 
$3,000 — $50.  The  fees  as  above  shall  be  deposited  with 
the  Secretary  in  advance  by  each  of  the  parties  to  the 
arbitration  and  shall  be  equally  divided  among  the  mem- 
bers sitting  on  the  case  and  clerk  of  the  Committee.  The 
Committee  shall  decide  by  which  party  to  the  case  the 
fees  shall  be  paid,  or  it  may  divide  the  fees  at  its  discre- 
tion. All  reports  and  awards  of  the  Arbitration  Committee 
shall  be  made  directly  to  the  Board  of  Directors,  whose 
duty  it  shall  be  to  see  that  such  awards  are  complied  with, 
unless  in  case  of  an  appeal. 

COMMITTEE    ON    APPEALS 

Sec.  1.  As  herein  provided,  the  Board  of  Directors,  with- 
in thirty  days  after  election,  shall  elect  a  Committee  of 
Appeals,  to  consist  of  five  members  of  the  Chamber,  not 
members  of  the  Board  of  Directors  nor  of  the  Arbitration 
Committee,  and  they  shall  hold  office  until  the  election  of 
their  successors. 


METHODS  287 

Sec.  2.  The  Committee  of  Appeals  shall  organize  at  the 
first  meeting  after  their  election,  by  choosing  one  of  their 
number  chairman,  and  shall  be  entitled  to  the  services  of 
the  Secretary  of  the  Chamber  as  clerk  of  the  Committee, 
or,  in  case  he  fails  to  act,  they  may  elect  a  clerk  pro  tern. 

Sec.  3.  A  record  of  their  proceedings  shall  be  kept  in  a 
book  provided  for  that  purpose,  in  which  shall  be  entered 
a  summary  of  each  controversy  had  before  them,  the  decision 
made  thereon,  and,  at  the  discretion  of  the  Committee,  the 
grounds  for  such  decision.  Said  book  to  be  the  property  of  the 
Chamber  and  subject  to  the  inspection  of  its  members. 

Sec.  4.  The  Committee  shall  review  any  decision  of  the 
Committee  of  Arbitration,  involving  over  one  hundred  dollars 
in  amount,  that  may  be  brought  before  it  on  appeal,  on 
the  written  application  of  the  dissatisfied  party,  within  five 
days  after  notice  of  said  decision  by  the  Arbitration  Com- 
mittee. The  said  written  application  for  the  services  of 
the  Committee  of  Appeals  shall  be  made  through  the  Sec- 
retary of  the  Chamber,  and  shall  embrace  a  copy  of  the 
original  complaint,  the  decision  of  the  Committee  of  Arbi- 
tration, and  substantially  the  grounds  of  the  exceptions 
taken  thereto  by  the  appealing  party. 

Sec.  5.  The  Committee  on  Appeals  may,  if  they  deem 
it  proper,  refuse  to  entertain  the  appeal  or  may  entertain  the 
same  and  confirm,  modify  or  reverse  the  judgment  of  the 
Arbitration  Committee,  and  its  decision  shall  be  final  and 
binding.  It  shall  report  its  judgment  directly  to  the  Board 
of  Directors,  whose  duty  it  shall  be  to  carry  it  into  effect; 
and  in  case  of  refusal  to  comply  with  the  judgment,  the 
Board  shall  suspend  or  expel  the  recusant  member. 

In  the  review  on  appeal  of  any  decision  of  the  Com- 
mittee on  Arbitration  of  the  Chamber,  or  of  any  committee 
referred  to  in  Section  5%  of  this  article,  if  the  parties  to  the 
appeal,  or  either  of  them,  offer  any  new  evidence  for  the 
consideration  of  the  Committee  on  Appeals,  that  Committee 
shall  not  in  the  first  instance  be  authorized  to  receive  or  con- 
sider such  new  evidence;  but  in  such  a  case  it  may,  in  its  dis- 
cretion, refer  the  matter  in  arbitration  to  the  Arbitration 
Committee  of  the  Chamber,  or  to  the  committee  referred 
to  in  Section  53^  of  this  article,  as  the  case  may  be,  for  re- 
hearing and  reconsideration  in  connection  with  such  new 
evidence  offered.     And  if  by  reason  of  any  rule  or  regulation 


288  COMMERCIAL   ARBITRATION 

of  any  subordinate  board  or  organization  of  the  Chamber, 
the  duly  authorized  committee  thereof,  referred  to  in  Section 
5  3^2  of  this  article,  shall  be  without  jurisdiction  to  rehear 
or  reconsider  said  matter  in  arbitration  in  connection  with  such 
new  evidence  offered,  then  the  Committee  on  Appeals  may 
continue  to  entertain  such  appeal  and  on  the  hearing  thereof 
it  may,  in  its  discretion,  receive  and  consider  such  new  evi- 
dence. The  provisions  of  this  section  shall  apply  to  all 
appeals  taken  under  authority  of  these  By-Laws. 

Consideration  of  new  evidence  by  the  Committee  on 
Appeals,  directly  or  by  reference  to  another  committee, 
as  aforesaid,  shall  be  granted  only  in  exceptional  cases  and 
where  the  consideration  of  such  new  evidence,  in  the  opinion 
of  the  Committee  on  Appeals,  is  necessary  to  prevent  or 
avoid  a  miscarriage  of  justice  between  the  parties  to  the 
appeal. 

Sec.  5 J/2.  The  Committee  on  Appeals  shall  also  review 
the  decisions  of  any  duly  authorized  committee  of  the  sub- 
ordinate boards  or  organizations  of  the  Chamber  formed 
under  Section  I  of  Article  IX  of  these  By-Laws,  when  brought 
to  its  attention  in  the  manner  prescribed  by  the  rules  and 
regulations  of  such  subordinate  boards  or  organizations, 
and  upon  such  review  the  rules  of  procedure  herein  prescribed 
shall  govern. 

Sec.  6.  Each  member  of  the  Committee  of  Appeals,  who 
shall  be  present  at  a  hearing  of  any  case,  shall  be  entitled 
to  a  fee  of  $5  for  each  sitting,  to  be  paid,  together  with  such 
fee  as  the  Committee  may  award  the  clerk,  by  the  party 
against  whom  the  decision  shall  be  rendered,  except  in  such 
cases  as  the  Committee  at  its  discretion  shall  otherwise  order. 
Before  entertaining  an  appeal  the  Committee  shall  require 
the  probable  amount  of  fees  to  be  deposited  with  the  Secretary 
of  the  Chamber. 

METHOD    OF    PROCEDURE 

The  following  is  given  for  information  of  parties  desiring 
to  submit  questions  for  arbitration  to  the  San  Francisco 
Chamber  of  Commerce: 

ARBITRATION 

1.  The  Chamber's  regular  form  of  Arbitration  Agree- 
ment must  be  signed  by  both  parties  and  witnessed  and 
be  deposited  with  the  Secretary. 


METHODS  289 

2.  Each  party  must  deposit  in  advance  the  full  amount 
of  the  arbitration  fees,  $25.00  to  $50.00,  as  specified  in 
Section  4,  of  the  Rules.  Any  necessary  expenses  incurred  by 
the  Committee  for  analysis,  cables,  etc.,  shall  also  be  paid 
by  the  party  or  parties  against  whom  they  are  assessed. 

3.  The  party  making  claim  will  send  to  the  Secretary, 
addressed  to  the  Arbitration  Committee,  six  copies  of  his 
written  statement  of  facts,  together  with  the  original  or 
copy  of  the  contract  and  of  any  other  documents  bearing 
upon  the  issue. 

4.  A  copy  of  said  statement  will  be  furnished  by  the 
Secretary  to  the  other  party,  who  will  file  as  soon  as  possible 
six  copies  of  his  reply  and  a  copy  or  original  of  any  other 
documents  he  wishes  to  submit. 

5.  Unless  both  parties  can  be  present  at  the  hearing  it 
will  be  understood  that  the  case  is  submitted  upon  written 
documents  and  other  evidence  furnished.  Neither  party 
can  be  represented  at  any  hearing  by  legal  counsel,  but 
must  appear  in  person  or  by  authorized  representative  if 
appearing  at  all.  In  case  of  arbitrations  on  quality  to  be 
decided  upon  sample  submitted,  appearance  of  parties  is 
not  necessary  unless  requested. 

6.  A  certified  copy  of  the  award  will  be  furnished  each 
party  and  any  balance  due  from  fees  deposited  will  be  refunded. 

APPEAL 

1.  If  any  case  is  appealed,  notice  thereof  must  be  re- 
ceived by  the  Secretary  not  later  than  five  days,  Sundays  and 
holidays  excepted,  after  notice  of  the  award  has  been  delivered 
to  appellant  or  at  his  place  of  business. 

2.  Appellant  will  send  with  said  notice,  six  copies  of  a 
statement  giving  the  grounds  upon  which  he  appeals  and 
a  similar  number  of  copies  of  the  arbitration  award.  These 
may  be  thin  carbon  copies.  He  will  also  deposit  in  advance 
the  estimated  minimum  fees  for  one  sitting,  $30.00. 

3.  The  other  party  will  be  furnished  with  a  copy  of 
appellant's  statement  and  will  furnish  six  copies  of  his  reply, 
if  he  desires  to  reply. 

4.  Neither  party  will  appear  at  the  meeting  of  the  Com- 
mittee on  Appeals  unless  requested  by  the  Committee  to  do 
so,  or  upon  special  request  of  the  parties. 

5.  A  certified  copy  of  the  Committee's  decision  will  be 
furnished   to   each   party. 


290  COMMERCIAL  ARBITRATION 

6.  The  decision  of  the  Committee  on  Appeals  is  final 
and  is  to  be  complied  with  immediately  after  it  is  received 
by  the  parties,  or  as  soon  thereafter  as  it  is  practicable  to 
comply. 

7.  If  more  than  one  sitting  of  the  Committee  is  neces- 
sary, such  additional  fees  as  are  assessed  by  the  Committee, 
shall  be  paid,  as  provided  in  the  decision.  Any  necessary 
expenses  incurred  by  the  Committee  shall  also  be  paid  by 
the  parties  at  interest  as  assessed  by  the  Committee. 

INTERSTATE  COTTONSEED  CRUSHERS'  ASSOCIATION. 

The  Interstate  Cottonseed  Crushers'  Association  by-laws  provide 
for  Committees  on  Arbitration  consisting  of  five  members  each  at  the 
following  named  cities: 

Houston  and  Dallas,  Texas;  New  Orleans,  La.;  Memphis,  Tenn.; 
Atlanta,  Ga.;  New  York  City,  and  "such  other  points  as  may  be  desig- 
nated by  the  Executive  Committee. "  The  several  chairmen  of  these 
various  permanent  Arbitration  Committees  constitute  the  Committee 
on  Appeal.  The  Committee  on  Appeals  shall  examine  all  cases  arising 
from  decisions  of  any  of  the  Arbitration  Committees  between  members 
of  the  Association.  Awards  on  Appeals  shall  be  based  upon  the  evidence 
submitted  to  the  Arbitration  Committees,  and  shall  be  final. 

The  rules  of  Arbitration  are  as  follows: 

CHAPTER   XV.       ARBITRATION 

RULE  290.  Agreement  to  Arbitrate.  In  case  any  dispute  with 
reference  to  any  contract  for  the  purchase  and/or  sale  of  any  com- 
modities covered  by  these  Rules  arises  between  members  of  this  Asso- 
ciation, which  the  parties  are  unable  to  adjust  between  themselves, 
such  dispute  shall,  upon  demand  of  either  party  thereto,  be  settled 
by  arbitration  before  an  Arbitration  Committee  of  this  Association, 
and  every  member  of  this  Association  by  becoming  such  has  agreed 
to  such  arbitration,  and  has  further  agreed  and  obligated  himself  to 
abide  by  and  perform  any  final  award  made  under  these  Rules,  by  any 
regular  Arbitration  Committee  or  Committees  of  Appeals  of  this 
Association,  whether  such  arbitration  be  held  ex  parte  or  on  agree- 
ments duly  signed  by  both  parties  as  herein  provided.  Both  parties 
to  the  dispute  will  sign  on  the  standard  form  of  this  Association  an 
agreement  referring  to  the  contract  or  subject  out  of  which  the  dispute 
has  arisen,  and  agreeing  to  abide  by  and  perform  the  award  of  the 
Committee.  The  Committee  of  this  Association  to  which  the  dis- 
pute is  referred  will  have  jurisdiction  to  determine  under  and  in  accord- 
ance with  these  Rules  the  entire  controversy  between  the  parties 


METHODS  291 

arising  out  of  the  transaction  referred  to  by  the  agreement  as  the  origin 
of  the  dispute.  When  a  controversy  is  submitted  to  a  Committee  Of 
this  Association  for  determination,  it  will  be  the  duty  of  such  Com- 
mittee to  determine  such  controversy,  being  guided  in  making  an 
award  by  the  Rules  of  this  Association  as  written. 

RULE  291.     Standard  Form  of  Agreement  for  Arbitration. 

The  Standard  Form  of  Agreement  for  Arbitration  is  as  follows: 

This  Article   of   Agreement,  made  and  entered  into  this 

the day  of ,  A.  D.  19 

WITNESSETH: 

That,    whereas,    differences    and    controversies    are    now 

existing  and  pending  between 

and 

in  relation  to 


Now,  therefore,  we,  the  undersigned,  do  hereby  mutually 
agree  to  submit  the  entire  controversy  arising  out  of  said 
transaction  to  the  arbitration  and  decision  of  an  Arbitration 
Committee  of  the  Interstate  Cotton  Seed  Crushers  Association, 
or  a  quorum  of  them,  with  the  right  of  appeal  on  the  part  of 
either  of  us  to  the  Appeals  Committee,  according  to  the  rules 
and  regulations  of  said  Interstate  Cotton  Seed  Crushers 
Association,  and  we  do  further  authorize  and  empower  the 
said  Arbitration  Committee,  or  a  quorum  of  them,  to  arbitrate, 
award,  adjust  and  determine  the  differences  now  existing  bet- 
tween  us  in  the  aforesaid  matter. 

And  we  do  further  covenant  and  agree  that  the  award 
to  be  made  as  aforesaid,  by  the  said  Committee  on  Arbitration, 
or  in  the  case  of  appeal  by  said  Appeals  Committee,  shall  in 
all  things  by  us  and  each  of  us  respectively  be  well  and  faith- 
fully performed;  that  we  will  stand  to,  abide  by,  and  fulfill 
the  same,  and  that  we  will  pay  whatever  sum  of  money  may 
be  awarded  as  aforesaid: 

And  further,  that  we  will  abide  by  all  the  rules  and  regula- 
tions of  said  Interstate  Cotton  Seed  Crushers  Association 
in  relation  to  arbitration,  and  herewith  deposit  with  the 
Secretary    of    the    Association,    as    required,    the    sum    of 

to   cover   the   cost   of  this 

arbitration. 


292  COMMERCIAL   ARBITRATION 

And  we  do  further  agree  that  the  awards  of  the  arbitrators, 
as  aforesaid,  whether  made  by  the  Arbitration  Committee  or 
the  Appeals  Committee,  if  made  in  writing  and  signed  by 
the  arbitrators,  and  attested  by  the  Secretary  of  the  Inter- 
state Cotton  Seed  Crushers  Association,  may  be  entered  on 
the  records  of  the  court  of  jurisdiction  in  the  State  and  county 
in  which  we  reside,  and  that  judgment  may  be  had  thereon 
in  accordance  with  the  terms  thereof. 

And  we  do  further  agree  that  whatever  samples,  if  any, 
which  may  be  submitted  by  either  party  to  the  controversy 
for  examination  may  be  destroyed  or  otherwise  disposed  of  at 
the  end  of  thirty  days  after  the  hearing  of  this  case,  if  not 
otherwise  instructed. 

RULE  292.  Powers  and  Duties  of  the  Secretary.  Where  the 
contract  does  not  specify  and  parties  are  unable  to  agree  upon  the 
Committee  to  hear  the  dispute,  the  Secretary  shall  select  the  Com- 
mittee to  which  the  dispute  will  be  referred.  The  Secretary  will  procure 
from  each  party  to  the  arbitration  an  agreement  in  writing,  on  the 
standard  form  of  the  Association,  binding  such  parties  to  abide  the 
decision  of  the  Arbitration  Committee,  and  in  case  of  appeal,  of  the 
Appeals  Committee,  and  to  pay  promptly  the  amount  of  the  award 
against  him.  The  Secretary  will  collect  the  required  deposits  and 
disburse  the  fees  and  expenses  allowed  hereunder.  The  Secretary  will 
call  meetings  of  the  various  Arbitration  Committees  and  of  the  Appeals 
Committees  when  necessary,  and  receive  all  papers  filed  in  connection 
with  arbitrations  hereunder,  transmit  same  to  the  proper  Committees, 
and  issue  such  notices  as  may  be  required  by  these  Rules.  All  briefs 
filed  with  respect  to  any  arbitration  hereunder  must  be  filed  in  duplicate, 
and  the  Secretary,  as  soon  as  such  briefs  are  filed,  will  furnish  a  copy 
thereof  to  the  opposite  party.  The  Secretary  will  furnish  either  side, 
when  so  requested,  certified  copies  of  any  and  all  papers  filed  in  con- 
nection with  any  arbitration  already  held,  the  expense  of  making  the 
copies  to  be  paid  by  the  party  requesting  the  same.  All  notices  to  be 
given  by  the  Secretary  hereunder,  unless  otherwise  specified,  and  all 
briefs  to  be  sent  by  him  will  be  sent  by  registered  mail,  return  receipt 
requested,  in  order  that  the  records  of  the  Secretary  of  the  Association 
shall  show  the  time  of  receipt  of  such  notices  and  briefs  by  the  party 
to  whom  the  same  are  addressed. 

RULE  293.  Appearance  and  Evidence  Before  Arbitration  and 
Appeals  Committees.  No  personal  appearance  or  parol  evidence 
will  be  permitted  before  the  Arbitration  Committee  or  the  Appeals 


METHODS  293 

Committee  except  upon  the  consent  of  the  Chairman  of  the  Com- 
mittee, but  where  one  party  is  permitted  to  appear  or  offer  parol 
evidence,  the  other  shall  have  the  same  right.  Evidence  before  the 
Committee,  except  as  just  provided,  will  consist  of  written  documents 
(including  letters  and  telegrams)  and  ex  parte  affidavits.  When  such 
personal  appearance  is  permitted,  it  may  be  in  person  or  by  attorney. 
The  practice  heretofore  followed  of  requiring  the  attendance  of  one 
or  more  members  of  the  Arbitration  Committee  before  the  Appeals 
Committee  is  abolished.  The  Arbitration  Committee  may,  however, 
in  making  its  award,  set  down  in  writing  the  reasons  for  such  award. 
A  copy  of  such  written  opinion  of  the  Arbitration  Committee  will  be 
furnished  to  all  parties  to  the  controversy,  and  a  copy  thereof  will  be 
filed  with  the  papers,  and  sent  up  to  the  Appeals  Committee  as  a  part 
of  the  record  in  the  case. 

RULE  294.  Chemists.  In  all  controversies  in  which  a  chemical 
analysis  is  required,  the  Chairman  of  the  Arbitration  Committee  to 
which  the  case  is  referred  will  name  the  chemist  who  will  make  such 
analysis.  Where  samples  are  submitted  to  a  chemist  for  analysis,  such 
chemist  shall  not  give  out  any  information  to  either  contestant  or  other 
person  as  to  his  analysis.  The  report  of  his  investigation  must  be  made 
to  the  Arbitration  Committee  alone.  Any  violation  of  this  rule  will 
subject  the  chemist  so  offending  to  expulsion  from  the  Association  by  a 
majority  vote  of  the  Executive  Committee.  The  chemist  to  whom 
samples  are  submitted  shall  promptly  analyze  the  same  and  report  his 
findings. 

RULE  295.  Classers  in  Linter  Arbitrations.  In  Linter  Arbitra- 
tions where  grades  are  involved  and  an  agreed  classer  has  not  been 
named  by  the  contestants,  the  Chairman  of  the  Arbitration  Committee 
before  whom  the  case  is  heard  may  name  the  classer,  who  shall  be  a 
disinterested  party. 

RULE  296.  Procedure  in  Arbitration.  For  convenience,  the 
party  or  parties  demanding  the  arbitration  will  in. these  Rules  and  in 
arbitration  proceedings  hereunder,  be  referred  to  as  complainant 
or  complainants  and  the  party  or  parties  against  whom  an  arbitration 
is  demanded  will  be  referred  to  as  defendant  or  defendants.  Demands 
for  arbitration  will  be  made  by  complainant  by  letter  or  telegram 
addressed  to  the  Secretary  of  the  Association,  When  an  arbitration 
has  been  demanded,  it  will  be  the  duty  of  the  complainant  to  promptly 
file  with  the  Secretary  of  the  Association  five  copies  of  his  agreement 
to  arbitrate  on  the  standard  form  of  the  Association.  Such  agreement 
must  state  the  names  of  the  parties  to  the  dispute,  and  make  reference 


294  COMMERCIAL   ARBITRATION 

to  the  contract  out  of  which  the  dispute  arises.  With  such  agreement 
to  arbitrate  complainant  must  file  his  brief  and  evidence.  As  soon  as 
such  agreement,  brief  and  evidence  are  filed,  together  with  deposit 
to  cover  probable  costs,  the  Secretary  of  the  Association  will  forward 
to  defendant  the  five  copies  of  the  complainant's  agreement  to  arbitrate, 
together  with  a  copy  of  the  complainant's  brief.  Defendant  must, 
within  five  days  after  he  has  received  the  papers  referred  to  above,  file  with 
the  Secretary  of  the  Association  two  copies  of  the  agreement  to  arbitrate, 
properly  signed,  retaining  the  third  copy  for  his  file,  and  within  twenty 
days,  brief  and  evidence.  As  soon  as  such  papers  are  filed  with  the 
Secretary,  he  will  furnish  to  the  complainant  a  copy  of  the  fully  executed 
agreement  for  arbitration,  and  a  copy  of  the  defendant's  brief.  The 
case  will  be  ready  for  submission  to  the  Arbitration  Committee  ten 
days  after  complainant  has  received  a  copy  of  defendant's  brief.  Within 
such  ten-day  period  complainant  may  file  such  reply  brief  and  additional 
evidence  as  he  may  desire  and  the  Secretary  will  immediately  furnish 
defendant  a  copy  thereof.  For  good  cause  shown,  the  President  of  the 
Association  may,  on  written  or  telegraphic  request  made  in  advance 
and  stating  the  necessity  therefor,  enlarge  the  time  for  filing  the  briefs 
and  evidence  as  above  specified,  but  in  no  case  shall  the  time  of  the 
defendant  for  answering  be  enlarged  for  a  period  of  more  than  twenty 
days  additional  time,  and  in  no  case  shall  the  time  of  the  complainant 
for  filing  reply  be  enlarged  more  than  ten  days  additional  time.  The 
evidence  may  be  submitted  in  the  form  of  samples  of  the  commodities 
involved,  letters,  telegrams  or  other  documents,  and  ex  parte  affidavits. 
Letters,  telegrams  and  other  documents  submitted  must  be  either 
originals  or  copies.  If  copies  are  furnished,  proof  must  be  made  by  the 
affidavit  of  a  credible  person  that  such  copies  are  true  and  correct 
copies  of  the  originals.  In  any  case,  however,  where  copies  are  used, 
the  Arbitration  Committee  will  have  the  right  to  demand  the  originals 
and  the  Committee  shall  further  have  the  right  to  require  the  production 
of  any  additional  documentary  evidence  or  other  evidence  in  the 
possession  of  the  parties  to  the  controversy,  and  which  the  Committee 
thinks  necessary  to  enable  it  to  give  the  case  intelligent  and  proper 
consideration.  A  refusal  on  the  part  of  the  complainant  to  submit 
such  additional  evidence  will  authorize  the  Arbitration  Committee 
in  its  discretion  to  dismiss  the  complaint,  and  refusal  on  the  part  of 
the  defendant  to  submit  such  additional  evidence  will  authorize  the 
Committee  in  its  discretion  to  render  an  award  against  him  as  by 
default. 

RULE    297.     Re-hearing    Before    Arbitration    Committee. 

Any  party  to  an  arbitration  who  is  dissatisfied  with  the  award  of  the 


METHODS  295 

Committee  may  have  the  ^cause  re-heard  by  the  Committee,  provided 
such  party  within  ten  days  after  receipt  of  notice  of  the  award,  but  not 
later,  files  with  the  Secretary  of  the  Association  his  written  or  tele- 
graphic notice,  stating  that  he  does  apply  for  a  re-hearing  of  the  con- 
troversy. Within  twenty  days  after  applicant  for  re-hearing  has 
received  notice  of  the  award,  he  must  file  with  the  Secretary  of  the 
Association  such  additional  evidence  and  brief  as  he  may  desire  to 
present  to  the  Committee.  The  brief  will  be  filed  in  duplicate,  and  the 
adverse  party  promptly  furnished  with  a  copy  thereof.  Within  ten 
days  after  such  copy  of  the  brief  has  been  received  by  the  adverse 
party,  he  may  file  such  reply  brief  as  he  desires.  At  the  end  of  such 
ten-day  period  the  case  will  be  ready  for  re-submission  to  the  Arbitra- 
tion Committee. 

RULE  298.  Appeal  to  the  Appeals  Committee.  In  all  cases 
where  the  amount  in  controversy  is  Three  Hundred  Dollars,  or  more, 
an  appeal  may  be  had  to  the  Appeals  Committee  by  any  party  to  the 
Arbitration  who  is  dissatisfied  with  the  award,  provided  such  party 
within  ten  days,  and  not  later,  after  he  receives  notice  of  the  award 
of  the  Arbitration  Committee,  files  with  the  Secretary,  by  letter  or 
telegram,  notice  of  his  intention  to  appeal.  Within  twenty  days  after 
receipt  of  notice  of  the  award  t henparty  appealing  must,  if  a  money 
award  has  been  made  against  him,  deposit  with  the  Secretary  the  full 
amount  of  such  award,  and  file  his  brief  in  support  of  his  appeal.  Briefs 
will  be  filed  in  duplicate,  and  promptly  upon  receipt  of  the  same  the 
Secretary  will  furnish  the  adverse  party  with  a  copy  thereof.  Such 
adverse  party  will  file  his  reply  brief  within  ten  days  after  receipt  of 
appellant's  brief,  and  thereafter  the  case  will  be  ready  for  final  sub- 
mission to  the  Appeals  Committee.  Neither  party  will  be  permitted 
to  introduce  any  additional  evidence  before  the  Appeals  Committee, 
but  the  case  will  be  decided  on  the  evidence  presented  to  the  Arbitra- 
tion Committee.  It  is  not  essential  to  the  right  of  appeal  that  application 
for  a  re-hearing  before  the  Arbitration  Committee  be  filed.  The  time 
for  filing  notice  of  appeal  will  run  from  the  date  appellant  receives 
notice  of  the  final  award  of  the  Arbitration  Committee.  The  Appeals' 
Committee  will  affirm, reverse  and  remand,  or  reform  the  award  of  the 
Arbitration  Committee. 

RULE  299.  Ex  Parte  Arbitration.  If  any  member  of  the  Asso- 
ciation fails  or  refuses  to  submit  to  arbitration  any  dispute  or  con- 
troversy he  may  have  with  another  member  of  the  Association,  on 
the  demand  of  such  member,  or,  if  any  member  against  whom  arbitra- 
tion has  been  demanded  should,  for  five  days  after  receipt  of  telegraphic 


296  COMMERCIAL   ARBITRATION 

notice  from  the  Secretary  to  proceed  with  the  arbitration,  fail  so  to  do, 
the  Chairman  of  a  Permanent  Committee  on  Arbitration,  upon  receipt 
of  such  complaint,  will  proceed  at  once  to  satisfy  himself  as  to  the  facts, 
and,  upon  a  finding  that  such  party  is  negligently  or  willfully  delaying 
the  arbitration,  he  will  so  notify  the  defendant  by  telegram  collect, 
and  the  Committee  will  proceed  with  the  arbitration  ex  parte,  and  the 
decision  so  rendered  will,  so  far  as  the  Association  is  concerned,  be 
binding  on  all  parties  involved  therein.  Any  papers  filed  by  defendant 
with  the  Secretary  before  the  case  is  heard  may  be  considered  by  the 
Committee.  The  complainant  will  pay  cost  of  such  arbitration,  but  the 
Committee  will,  if  the  award  is  in  complainant's  favor,  add  the  amount 
of  such  cost  to  the  award. 

RULE  300.  Penalty  for  Refusal  to  Arbitrate  or  Comply  with 
Award.  If  any  member  of  this  Associatiou  shall  refuse  to  carry  out  the 
final  award  of  the  Arbitration  or  Appeals  Committee,  as  the  case  may 
be,  the  other  party  or  parties  to  the  arbitration  may  report  the  matter 
to  the  Chairman  of  the  Permanent  Committee  on  Arbitration,  who  shall 
at  once  investigate  the  correctness  of  the  complaint,  and,  if  the  com- 
plaint is  substantiated,  he  shall  at  once  notify  the  President  of  the 
Association,  who  will  immediately,  through  the  Secretary,  demand  of 
the  party  in  default  full  compliance  with  the  requirements  of  these 
Rules,  and  the  award  of  the  Committee,  within  five  days  after  the 
receipt  of  such  notice.  If  the  member  fails  or  refuses  to  comply  with  such 
official  demand,  he  shall  be  immediately  expelled  from  the  Association, 
and  the  President  over  his  signature,  countersigned  by  the  Secretary, 
shall  so  notify  him,  and  at  the  same  time  and  in  the  same  manner,  a 
circular  letter  shall  be  sent  to  every  member  of  the  Association  notifying 
him  that  such  member  has  been  expelled  from  the  Association  for 
refusal  to  abide  by  the  award  of  an  Arbitration  or  Appeals  Committee. 
Any  member  so  expelled  shall  not  again  become  a  member  of  this 
Association  until  he  shall  have  paid  and  satisfied  in  full  the  award 
against  him,  and  then  only  upon  majority  vote  of  the  Executive  Committee. 
No  person,  firm  or  corporation  that  has  been  expelled  from  the  Texas 
or  other  State  Cotton  Seed  Crushers'  Association  shall  be  eligible  to 
membership  in  this  Association  until  he  or  it  shall  have  satisfied  the 
demands  against  him  or  it,  and  had  his  or  its  membership  therein 
restored,  and  such  expulsion  ipso  facto  forfeits  membership  already 
had  in  this  Association.  If  at  any  time  the  Secretary  of  any  such  State 
Association  shall  certify  to  the  President  of  this  Association  that  any 
member  of  this  Association  has  been  expelled  from  such  Association, 
the  President  and  Secretary  will  issue  prompt  notice  of  the  fact  to  all 
members  of  this  Association. 


METHODS  297 

RULE  301.  Deposits,  Costs  and  Fees.  Any  member  of  this 
Association  by  or  against  whom  an  arbitration  or  application  for  re- 
hearing is  demanded,  shall,  when  the  demand  is  made  or  agreed  to,  as 
the  case  may  be,  deposit  with  the  Secretary  of  the  Association,  bank 
draft  for  the  sum  of  $50.00.  Any  party  by  or  against  whom  an  appeal 
to  the  Appeals  Committee  is  demanded,  shall  at  the  time  of  the  demand, 
deposit  with  the  Secretary  of  the  Association,  the  sum  of  $250.00.  The 
deposits  so  made  will  be  held  by  the  Secretary  until  the  decision  in 
the  case  becomes  final,  when  the  deposit  of  the  ultimate  loser  will  be 
used  to  pay  the  costs  awarded  against  him.  The  following  fees  shall 
be  taxed  as  costs  in  every  arbitration,  rehearing  or  appeal: 

To  the  Association  for  each  original  arbitration $  10.00 

To  be  divided  equally  among  Committeemen  serving  on  each 

original  arbitration 35.00 

To  the  Chairman  of  the  Arbitration  Committee,  in  addition 

to  his  pro  rata  part  of  the  Committee  fee,  for  each  original 

arbitration 5.00 

To  the  Association  for  each  rehearing , 10.00 

To  be  divided  equally  among  Committeemen  serving  on  each 

rehearing 35.00 

To  the  Chairman  of  the  Arbitration  Committee,  in  addition 

to  his  pro  rata  part  of  the  Committee  fee,  for  each  rehearing       5.00 

To  the  Association  for  each  appeal 10.00 

To  each  member  of  the  Appeals  Committee  for  each  appeal 10.00 

To  the  Chairman  of  the  Appeals  Committee  for  each  appeal 15.00 

To  each  chemist  for  each  official  analysis 

For  each  ex  parte  opinion  of  the  Arbitration  Committee  as  to 

quality 25.00 

In  addition  to  the  above  fees,  every  member  of  the  Association 
serving  on  any  one  of  the  above  committees  will  have  refunded  to 
him  the  actual  expense  incurred  by  him  by  reason  of  his  attendance 
at  the  meeting  of  the  committee,  such  expense  to  be  taxed  as  costs. 
Where  a  Committee  decides  more  than  one  case  at  a  given  session,  the 
expense  of  the  Committeemen  will  be  prorated  equally  to  the  cases 
heard  at  such  session,  so  that  each  Committeeman  will  be  allowed  to 
collect  only  once  the  expenses  incurred  by  him  in  attending  such  sitting 
of  the  Committee.  The  entire  cost  of  the  arbitration  will  be  assessed 
against  and  paid  by  the  final  loser  in  the  arbitration,  provided,  however, 
if  the  party  against  whom  an  award  is  made  satisfies  the  Committee 
that  he  had  tendered  an  offer  of  compromise  which  had  been  rejected, 
and  that  such  tender  was  renewed  before  the  Committee,  the  cost  will 


298  COMMERCIAL   ARBITRATION 

be  assessed  against  the  party  in  whose  favor  the  award  is  made,  unless 
the  award  made  is  in  excess  of  the  compromise  offered.  When  the  con- 
troversy is  finally  determined  the  Secretary  of  the  Association  will,  out 
of  the  deposits  made  by  the  party  against  whom  the  costs  are  assessed 
pay  all  fees  and  costs  of  arbitration,  and  will  return  to  the  other  party 
the  deposit  made  by  him.  If  the  deposit  is  insufficient  to  pay  the  costs 
assessed,  the  party  against  whom  such  costs  are  assessed  shall  im- 
mediately pay  the  difference  to  the  Secretary  of  the  Association. 

RULE  302.  Notice  of  Claims  and  Resignations  Pending 
Arbitrations.  Members  of  the  Association  should  notify  the  Secretary 
of  any  differences  had  or  likely  to  arise  in  order  that  he  may  forestall 
the  resignation  of  any  member  against  whom  a  complaint  is  about  to 
be  made.  No  member  of  this  Association  against  whom  an  arbitration 
has  been  or  is  about  to  be  demanded  or  against  whom  a  complaint  of 
any  nature  is  made,  shall  be  allowed  to  resign  until  all  matters  in  ques- 
tion are  settled. 

RULE  303.  Arbitration  Between  Members  and  Non-Mem- 
bers. When  an  arbitration  is  demanded  by  or  against  a  non-member, 
and  the  non-member  consents  in  writing  and  deposits  with  the  Secretary 
of  the  Association  the  usual  fees  required  in  such  cases  and  pays  into 
the  treasury  of  the  Association  for  its  use  and  benefit  an  additional 
fee  of  $100.00,  the  dispute  will  be  arbitrated  in  the  manner  hereinabove 
set  out,  with  reference  to  disputes  between  members. 

RULE  304.  Arbitration  Before  a  Permanent  Committee  of 
Arbitration  Without  Referring  the  Papers  to  Secretary.      At 

points  where  Permanent  Arbitration  Committees  of  this  Association 
are  located,  such  Committees  may,  if  they  so  desire,  undertake  arbitra- 
tion under  these  Rules,  delegating  one  member  of  the  Committee  to 
perform  the  clerical  work  and  correspondence  involved,  without 
referring  the  papers  to  the  Secretary  of  the  Association,  but  in  such 
cases  the  Committee  is  responsible  for  and  must  promptly  remit  to  the 
Secretary  the  Association  fee,  together  with  the  papers  and  final 
decision,  for  file  and  record.  After  this  is  done  in  all  arbitration  cases, 
correspondence  concerning  the  decision  on  the  part  of  the  principals 
in  the  case  shall  be  addressed  to  the  Secretary  of  the  Association.  The 
procedure  in  such  case  will  be  the  same  as  in  other  cases. 

RULE  305.  Claims  Arising  Before  One  or  Both  of  the  Dis- 
putants Become  Members  of  the  Association.  Where  a  member 
demands  an  arbitration  against  another  member,  and  it  appears  that 
the  claim  grew  out  of  a  transaction  had  between  them  when  one  or  both 


METHODS  299 

of  them  were  not  members  of  the  Association,  no  Arbitration  Com- 
mittee of  this  Association  will  have  jurisdiction  to  hear  the  case  unless 
both  parties  agree  that  it  may  do  so. 

RULE  306.  Ex  Parte  Opinion  of  the  Arbitration  Committee 
as  to  Quality  of  Products.  Any  member  of  the  Association  may,  upon 
payment  of  the  prescribed  fee,  take  the  opinion  of  the  Arbitration 
Committee  as  to  the  quality  of  any  product,  and  likewise  as  to  the 
money  value  of  any  difference  between  such  quality  and  the  quality 
called  for  by  a  given  contract,  whether  such  contract  be  between 
members  or  between  a  member  and  a  non-member. 

RULE  307.  Appointment  and  designation  of  Arbitration 
and  Appeals  Committees.  Permanent  Arbitration  Committees  will 
be  appointed  by  the  President  to  sit  at  New  York,  Memphis,  Atlanta, 
New  Orleans,  Chicago,  Dallas,  Houston,  Montgomery,  Little  Rock, 
Jackson,  Miss.,  and  Oklahoma  City,  and  other  points  where  application 
is  made  by  not  less  than  ten  members  of  the  Association,  provided  the 
President  thinks  it  wise  to  appoint  a  Committee  at  the  place  requested. 
Such  appointments  will  be  made  as  soon  as  convenient  after  the 
President  is  elected.  A  Permanent  Arbitration  Committee  will  consist 
of  five  members,  any  three  of  whom  will  constitute  a  quorum  for  the 
transaction  of  business.  Each  Committee  will  meet  upon  the  call 
of  the  Secretary  as  often  as  is  necessary  for  the  prompt  dispatch  of 
business.  The  President  shall  designate  five  members  of  the  Appeals 
Committee  to  serve  on  appealed  cases,  naming  the  chairman  and  the 
place  for  hearing  each  case.  The  members  so  selected  will  be  those 
available  who  happen  to  be  most  convenient  to  the  point  of  the  original 
arbitration.  The  chairman  of  the  Arbitration  Committee  which  passed 
on  the  case  originally  will  be  excluded. 

DRIED  FRUIT  ASSOCIATION  OF  CALIFORNIA,  DRIED 
FRUIT  ASSOCIATION  OF  NEW  YORK,  DRIED  FRUIT  ASSO- 
CIATION OF  CHICAGO,  DRIED  FRUIT  ASSOCIATION  OF 
ST.  LOUIS,  NATIONAL  CANNED  FOODS  AND  DRIED  FRUITS 
BROKERS'  ASSOCIATION,  NATIONAL  CANNERS  ASSO- 
CIATION, NATIONAL  WHOLESALE  GROCERS'  ASSOCIATION. 

The  foregoing  organizations  operate  under  rules  of  arbitration 
jointly  agreed  upon,  boards  of  arbitration  being  located  at  various 
designated  cities  hereinafter  set  forth.  These  joint  rules  have  been  in 
effect  since  1913  and  have  been  uniformly  successful.  Litigation  in 
these  allied  branches  of  business  has  been  lessened  materially  and  as  a 


300  COMMERCIAL   ARBITRATION 

rule  prompt  decision  is  rendered  by  the  association  or  board  to  which 
submission  of  a  dispute  is  made. 
The  rules  are  as  follows: 

1.  These  Rules  of  Arbitration  shall  be  known  and  desig- 
nated as  the  "National  Dried  Fruit  Rules  of  Arbitration." 

2.  Where  in  any  contract  arbitration  is  provided  for  under 
these  rules  and  is  applied  for  by  either  party  to  the  contract, 
such  arbitration  shall,  in  the  absence  of  mutual  agreement 
to  the  contrary,  be  held  at  the  city  designated  herein  situated 
in  closest  proximity  or  most  convenient  to  the  destination 
of  shipment,  and  such  arbitration  must  be  held  at  one  of  the 
following  named  cities,  to-wit:  Baltimore,  Boston,  Buffalo, 
Chicago,  Cincinnati,  Cleveland,  Denver,  Detroit,  Indianapolis, 
Kansas  City,  Los  Angeles,  the  Twin  Cities  (Minneapolis 
and  St.  Paul),  New  York,  New  Orleans,  Oklahoma  City, 
Omaha,  Peoria,  Philadelphia,  Portland,  Pittsburgh,  Richmond, 
San  Francisco,  Seattle,  St.  Louis,  Toledo. 

3.  All  communications  relative  to  arbitrations  shall  be  ad- 
dressed to  the  Secretary  of  the  Association  before  whom  the 
arbitration  is  to  be  held  if  in  New  York,  Chicago,  St.  Louis 
or  San  Francisco,  and  to  the  Chairman  of  the  Joint  Arbitration 
Board  appointed  by  the  National  Wholesale  Grocers'  Asso- 
ciation and  the  National  Canned  Foods  and  Dried  Fruit 
Brokers'  Association  in  the  cities  of  New  Orleans,  Denver, 
Seattle,  the  Twin  Cities  (Minneapolis  and  St.  Paul),  Kansas 
City,  Omaha,  Boston  or  Philadelphia. 

4.  All  arbitrations  shall  be  held  at  some  regular  designated 
place  in  such  city.  The  names  and  addresses  of  the  various 
Secretaries  and  presiding  officers  shall  appear  upon  or  accom- 
pany all  copies  of  these  Rules  of  Arbitration. 

5.  All  arbitration  boards  or  committees  shall  be  made 
up  of  a  sufficient  number  of  individuals  so  that  in  case  of 
absence  or  inability  to  serve,  on  the  part  of  a  member  or 
members,  or  direct  or  indirect  interest  in  the  controversy 
which  shall  disqualify  there  will  be  at  least  two  additional 
members  who  may  be  called  upon  to  act. 

6.  Three  (3)  arbitrators  shall  serve  in  all  cases  and  the 
agreed  decision  of  any  two  (2)  shall  be  binding  on  all  parties. 
The  dissenting  arbitrator  shall,  however,  sign  the  findings 
(as  dissenting  thereto)  and  may  give  his  reasons  therefor. 

7.  The  following  shall  be  the  form  of  request  for  arbitra- 
tion: 


METHODS  301 

,  19 


To 


The   undersigned   requests  that   arbitration   be   held   on 

as    between of 

and of based  upon 

the  condition  of  a  contract  of  sale  providing  for  arbitration 
under  the  National  Dried  Fruit  Rules  of  Arbitration  and 
hereby  agrees  to  absolutely  abide  by  the  award  and  findings 
of  the  Arbitrators,  and  in  the  event  of  adverse  decision,  to 
make  prompt  settlement,  paying  the  fees  and  costs  as  pro- 
vided for  in  said  Rules  of  Arbitration. 


By 

8.  A  written  statement  of  facts  and  anything  else  that 
may  have  relevant  bearing  on  the  case,  together  with  written 
argument  thereon  may  be  presented  to  the  Secretary  of  the 
Association  or  Chairman  of  the  Arbitration  Board  as  the 
case  may  be,  and  shall  by  him  be  submitted  in  its  entirety  to 
the  arbitrators,  but  no  oral  presentation  shall  be  made  unless  the 
parties  agree  thereto,5  or  same  is  requested  by  the  arbitrators. 

9.  Findings  in  all  arbitrations  shall  be  in  conformity 
with  the  provisions  of  the  Uniform  Dried  Fruit  contract, 
as  agreed  upon  and  adopted  by  the  National  Wholesale 
Grocers'  Association  and  the  Dried  Fruit  Association  of 
California. 

If  the  dispute  involves  a  question  of  quality  or  size,  the 
arbitration  shall  be  held  upon  agreed  samples  drawn  and 
forwarded  to  the  Secretary  of  the  Association  or  the  Chairman 
of  the  Board  before  whom  the  arbitration  is  held  in  accordance 
with  the  provisions  of  the  contract  between  the  parties. 

10.  The  fee  in  all  cases  of  arbitration  shall  be  $20.00, 
which  amount  shall  be  deposited  by  both  parties  in  advance 
with  the  Secretary  of  the  Association  or  the  Chairman  of  the 
Arbitration  Board  as  the  case  may  be,  but  the  party  in  whose 
favor  decision  is  rendered  shall  be  entitled  to  a  return  of  his 
deposit  when  findings  are  forwarded  to  him. 

11.  Out  of  the  fee  above  provided  for,  the  arbitrators 
shall  receive  the  sum  of  $5.00  each  for  their  services  and  the 
Association  or  Board  shall  retain  a  like  sum  of  $5.00  to  cover 
incidental  expenses. 


302  COMMERCIAL   ARBITRATION 

12.  When  a  buyer  claims  anjallowance  only,  he  shall, 
pending  award  and  after  samples  are  duly  drawn,  be  entitled 
to  use  balance  of  shipment. 

13.  The  findings  and  award  of  the  arbitrators  shall  be  in 
writing  signed  by  the  arbitrators,  fully  setting  forth  the  facts 
of  the  case  and  a  copy  thereof  shall  immediately  be  furnished 
to  all  the  parties  to  the  dispute.  The  losing  party  shall  bear 
any  and  all  expenses  connected  with  the  forwarding  of  samples. 

14.  Before  entering  upon  the  duties  of  their  office,  the 
members  of  the  Committees  or  Boards  of  Arbitration  shall 
subscribe  to  the  following  oath:  "You  do  severally  swear 
that  you  respectively  will  faithfully  and  fairly  hear  and 
examine  the  matters  in  controversy  which  may  come  before 
you  during  your  tenure  of  office  and  to  make  a  just  award  there- 
in, according  to  the  best  of  your  understanding;  so  help 
you,  God." 

15.  Where  arbitration  findings  are  based  on  samples 
and  decision  is  against  shipper,  the  samples  upon  which 
arbitration  was  held  shall,  on  immediate  request  and  at  his 
expense,  be  returned  to  him  for  his  information. 

16.  For  the  guidance  of  all  parties  to  arbitration  it  shall 
be  understood  that  five  (5)  full  business  days  shall  be  con- 
sidered Immediate  Shipment  and  ten  (10)  full  business  days 
shall  be  considered  Prompt  Shipment. 

RICE  ASSOCIATION  OF  CALIFORNIA 

Section  1 .  All  members  of  this  Association,  if  called  upon  by  a  mem- 
ber, shall  submit  for  arbitration  all  disputes  or  matters  subject  to 
arbitration  that  may  arise.  By  unanimous  vote  the  Board  of  Directors, 
if  called  upon,  shall  have  the  authority  to  decide  what  constitutes  an 
arbitration. 

Section  2.  In  case  of  any  dispute  arising  between  members  of  this 
Association,  or  a  member  of  this  Association  and  a  foreign  or  domestic 
buyer,  or  seller,  or  authorized  agent,  out  of  a  contract  sale  or  purchase, 
and  such  dispute  be  submitted  for  arbitration  through  or  by  this  Asso- 
ciation, such  arbitration  shall  be  governed  by  the  following  rules: 

A — All  communications  relative  to  arbitrations  shall  be  directed 
to  the  "Secretary"  of  The  Rice  Association  at  San  Francisco, 
California. 

B — All  arbitrations  shall  be  held  at  the  office  of  said  Association 
at  San  Francisco,  California. 


METHODS  303 

C — An  Arbitration  Committee,  consisting  of  three  disinterested 
members,  shall  be  appointed  by  the  President  of  the  Asso- 
ciation to  handle  each  arbitration. 

D — The  following  shall  be  added  to  each  request  for  arbitration 
to  be  used  by  both  parties: 

"The  undersigned  having  consented  that  an  arbitration 
be  held  through  the  Rice  Association  and  under  the  rules  and 

regulations  of  said  Association  in  the  matter  of 

hereby  agrees  and  promises  subject  to  Article  XIV,  Section  3, 
to  abide  absolutely  by  the  award  and  findings  of  the  arbi- 
trators and  in  the  event  of  an  adverse  decision,  to  make 
prompt  settlement  and  likewise  pay  the  fee  and  costs  as 
provided  for  in  the  Rules  of  said  Association." 

E — A  written  statement  of  facts  and  anything  else  that  may  have 
relevant  bearing  on  the  case,  together  with  written  argument 
thereon,  may  be  presented  to  the  Secretary  of  the  Associa- 
tion and  shall  by  him  be  submitted  in  its  entirety  to  the 
principals  involved  and  to  the  arbitrators,  but  no  personal 
representative  shall  appear  unless  both  parties  can  be 
present  and  oral  presentation  is  requested  by  the  arbi- 
trators. 

F — Findings  in  all  arbitrations  shall  be  in  conformity  with  the 
provisions  of  The  Rice  Association  uniform  contracts  as 
agreed  upon  and  adopted  by  this  Association.  If  the  dis- 
pute involves  a  question  of  quality  or  grade,  the  arbitration 
shall  be  held  upon  agreed  samples  drawn  and  forwarded  to 
San  Francisco  in  accordance  with  the  provisions  of  the  said 
contract. 

G — Findings  on  foreign  arbitrations  shall  be  passed  upon  in 
accordance  with  the  terms  of  the  agreement  upon  which  the 
sale  in  question  was  made. 

H — The  fee  in  all  cases  of  arbitration  to  be  paid  by  the  losing 
party  shall  be  not  less  than  $30.00,  the  sum  to  be  deposited 
to  the  account  of  the  Association,  each  arbitrator  to  receive 
a  $5.00  fee  for  his  services. 

I — The  findings  and  award  of  the  arbitrators  shall  be  in  writing, 
signed  by  the  arbitrators,  and  copy  thereof  shall  immediately 
be  furnished  to  the  parties  to  the  dispute.  The  losing  party 
shall  bear  any  and  all  expenses  connected  with  the  arbitra- 
tion. 


304  COMMERCIAL   ARBITRATION 

J — If  new  testimony  or  facts  develop  and  are  presented  in 
writing  bjr  either  party  to  the  Arbitration  Committee  within 
five   (5)   days  after  their  original  decision,   case  may  be 
re-opened,  provided    the  Arbitration  Committee  concludes 
that  said  new  testimony  or  facts  warrant  a  rehearing. 
Section  3.     Any  member  of  this  Association  involved  in  an  arbitra- 
tion and  not  satisfied  with  the  decision  of  the  Association  Arbitration 
Committee,  may  take  his  dispute  up  with  the  Committee  on  Appeals 
of  the  San  Francisco  Chamber  of  Commerce,  for  review,  as  prescribed 
in  Article  XIII,  Section  5/^,  of  the  Chamber's    By-Laws,    provided 
that  any  change  of  decision  must  be  concurred  in  by  at  least  three 
members  of  the  Appeals  Committee  and  provided  that  in  any  case 
depending  upon  its  decision  on  the  quality  of  any  lot  of  rice,  the  decision 
of  the  Association  Arbitration  Committee  shall  be  final  and  binding 
without  the  right  of  appeal  to  the  Committee  on  Appeals  of  the  Cham- 
ber.   All  appeals  must,  however,  be  made  in  writing  within  five  days 
(excepting  Sundays  and  holidays)  after  a  decision  is  rendered  by  the 
Association  Arbitration  Committee. 

CALIFORNIA  BEAN  DEALERS  ASSOCIATION 

This  association  provides  for  arbitration  under  the  terms  of  the 
Uniform  California  Bean  Contract.  If  the  question  is  one  of  quality, 
or  quality  as  well  as  some  other  contract  provision,  the  place  of  arbitra- 
tion is  either  Los  Angeles  or  San  Francisco.  Seller's  option;  if  for  any 
other  reason  than  for  quality,  arbitration  shall  be  held  either  in  San 
Francisco  or  Los  Angeles  before  the  Arbitration  Board  of  the  California 
Bean  Dealer's  Association  under  its  rules,  or  in  New  York,  Chicago 
or  St.  Louis  by  the  Dried  Fruit  Association  of  these  cities,  or  New 
Orleans,  before  the  Committee  of  the  New  Orleans  Board  of  Trade,  Ltd. 

Either  party  to  an  arbitration  before  this  association  may  appeal 
from  an  award  involving  any  question  other  than  quality,  such  appeal 
being  to  the  board  of  directors  of  the  California  Bean  Dealers  Asso- 
ciation under  the  rules  of  said  association.  No  appeal  is  allowed  where 
the  question  is  one  of  quality  only. 

The  by-laws  of  the  association  provide  for  arbitration  as  follows : 

ARBITRATION 
Article  13,  Section  1.  Arbitration  of  any  dispute  arising  out  of 
the  Uniform  California  Bean  Contract  shall  be  submitted  to  this 
association,  and  shall  be  under  the  jurisdiction  of  any  committee 
appointed  for  the  time  being  in  accordance  with  Article  4,  Section  6  of 
these  by-laws. 


METHODS  305 

Section  2.  All  communications  relative  to  arbitration  shall  be 
addressed  to  the  California  Bean  Dealers  Association  at  San  Francisco 
or  at  Los  Angeles. 

Section  3.  Three  (3)  arbitrators  shall  serve  on  each  case  and  the 
agreed  decision  of  any  two  shall  be  binding  on  all  parties.  The  dis- 
senting arbitrator  shall,  however,  sign  as  dissenting  thereto  and  may 
give  reasons  therefor. 

Section  4.  The  fee  in  all  cases  of  arbitration  shall  be  $20.00,  which 
amount  shall  be  deposited  with  the  association  by  each  party  at  the 
time  of  making  application  for  arbitration,  but  the  party  in  whose 
favor  decision  is  rendered  shall  be  entitled  to  the  return  of  his  deposit 
when  the  Findings  and  Award  are  forwarded  to  him;  provided,  that 
the  foregoing  shall  not  abridge  the  right  of  the  arbitrators  in  exercising 
their  judgment  in  the  assessment  of  fees  to  be  paid  by  either  or  both 
parties. 

Section  5.  The  following  is  the  form  of  request  for  arbitration 
substantially  to  be  used  by  parties  submitting  to  arbitration: 

"The  undersigned  having  consented  that  an  arbitration  be 
held  through  the  California  Bean  Dealers  Association,  and 
under  the  rules  and  regulations  of  said  association  in  the 

matter  of 

hereby  agrees  and  promises  absolutely  to  abide  by  the  award 
and  findings  of  the  arbitrators,  and  in  the  event  of  an  adverse 
decision,  to  make  prompt  settlement  and  likewise  pay  the 
fees  and  costs  as  required  by  said  association. 

Enclosed  please  find  check  for  $20.00  deposited  on  account 
of  arbitration  fees." 

(Signed) 

Section  6.  Written  statements  of  fact,  together  with  written 
arguments  thereon,  must  be  presented  to  the  association,  and  it  shall 
be  the  duty  of  the  secretary  to  submit  the  same  in  their  entirety  to 
the  arbitrators,  but  no  oral  evidence  shall  be  received  unless  requested 
by  the  arbitrators,  provided,  if  one  party  has  the  opportunity  to  be 
heard  in  person  the  absent  party  shall  likewise  have  the  opportunity 
to  be  heard. 

Section  7.  Sample  for  arbitration  shall  be  drawn  and  forwarded 
to  the  association  in  accordance  with  the  provisions  of  the  contract 
covering  samples  in  case  of  dispute.  The  expense  of  such  samples  may 
be  assessed  by  the  arbitrators  in  their  discretion. 


30b'  COMMERCIAL   ARBITRATION 

Section  8.  The  finding  and  award  of  the  arbitrators  shall  be  in 
writing,  signed  by  the  arbitrators  fully  setting  forth  the  facts  in  the 
case,  and  a  copy  thereof  shall  immediately  be  furnished  the  parties 
to  the  dispute. 

Section  9.  When  arbitration  award  is  based  upon  samples,  the 
samples  on  which  arbitration  was  held  shall,  on  immediate  request, 
be  returned  to  the  owner  at  his  expense. 

Section  10.  A  member  of  the  association  who  refuses  to  submit 
to  the  association  any  dispute  arising  out  of  a  Uniform  California 
Bean  Dealers  Association  contract  providing  for  arbitration,  or  who 
fails  or  refuses  within  a  reasonable  time  to  abide  by  the  finding  and 
award  of  the  arbitrators,  except  in  case  of  an  appeal,  shall  be  reported 
to  the  board  of  directors  by  the  secretary  and  the  directors  shall  have 
power  to  act  in  such  manner  as  the  facts  warrant,  and  may  suspend 
or  expel  such  member,  reporting  such  action  to  the  membership.  A 
member  charged  with  a  breach  of  the  by-laws  shall  have  the  right  to 
be  heard  on  such  charge,  but  no  member  may  appear  by  legal  counsel. 

Section  11.  An  appeal  from  any  finding  and  award  of  arbitrators, 
except  in  cases  involving  the  question  of  quality  only,  from  which  no 
appeal  is  allowed,  may  be  made  to  the  board  of  directors  of  the  division 
under  whose  jurisdiction  the  original  arbitration  was  held.  A  director 
who  shall  have  acted  as  arbitrator  in  the  matter  on  appeal  shall  be 
ineligible  to  act  with  the  board  while  considering  the  appeal.  Notice 
of  such  appeal  shall  be  given  within  three  full  business  days  after 
receipt  of  official  copy  of  finding  and  award,  and  shall  be  accompanied 
by  a  check  in  the  sum  of  $50.00  when  the  amount  involved  is  $500.00 
or  less,  and  a  check  in  the  sum  of  $100.00  when  the  amount  involved  is 
more  than  $500.00,  which  sum  shall  be  retained  by  the  association 
if  decision  of  original  arbitrators  is  upheld,  and  returned  to  the  appellant 
if  not  upheld.  All  expenses  incurred  by  the  board  of  directors  con- 
sidering the  appeal  may,  at  the  board's  option,  be  assessed  against  the 
losing  party. 

Section  12.  The  arbitrators  shall  receive  for  their  services  from 
the  association  such  portion  of  the  arbitration  fee  as  the  association 
may  provide. 

Section  13.  This  association,  having  a  northern  division,  with 
offices  at  San  Francisco,  and  a  southern  division,  with  offices  at  Los 
Angeles,  it  is  understood  that  the  provisions  of  these  by-laws  providing 
for  arbitration  and  establishing  the  method  thereof  shall  be  given  full 
force  and  effect  by  the  respective  boards  of  directors  of  both  said 


METHODS  307 

divisions,  and  that  the  respective  boards  of  directors  shall  give  full 
force  and  effect  to  the  findings  and  awards  of  all  arbitrators  of  the 
association  whether  acting  under  the  jurisdiction  of  the  northern 
division  or  the  southern  division,  in  like  manner  as  if  there  was  only 
one  division  and  the  membership  was  identical.  Immediately  upon 
ratification  of  this  by-law  by  the  respective  memberships  of  the 
northern  and  southern  divisions  of  this  association,  no  person,  firm 
or  corporation  shall  be  eligible  to  membership  in  either  division  who 
shall  be  under  suspension  or  who  shall  have  been  expelled  by  the  board 
of  directors  of  either  division.  A  member  of  either  division  who,  upon 
due  notice,  fails  or  refuses  to  submit  to  the  division  having  jurisdiction 
under  the  uniform  contract  any  dispute  shall  be  liable  to  suspension 
or  expulsion  by  the  directors  of  the  division  with  which  the  member 
so  refusing  is  identified  as  a  member.  A  member  under  suspension 
may  be  reinstated,  or  a  member  once  expelled  may  be  readmitted,  by  a 
two-thirds  vote  of  the  directors  present  at  any  meeting  of  the  directors 
having  jurisdiction  of  the  cause  in  the  first  instance,  provided,  that 
the  cause  of  suspension  or  expulsion  shall  have  been  terminated. 

Section  14.  When  an  arbitrator  is  appointed  in  accordance  with 
Article  4,  Section  6,  he  shall  be  obliged  to  serve  unless  for  good  cause 
shown,  and  shall  not  be  released  from  such  service  without  the  consent 
of  the  officer  making  the  appointment. 


Appendix 


FORM  OF  SUBMISSION  TO  THE  CHAMBER  OF  COMMERCE 
OF  THE  STATE  OF  NEW  YORK 

FORM  A. 

The  Committee  on  Arbitration  of  the  Chamber  of  Commerce  of  the  State  of 

New  York. 


and 


Submission. 


A  controversy,  dispute  or  matter  of  difference  between  the  undersigned  having 
arisen  and  relating  to  a  subject  matter  the  nature  of  which,  briefly  stated,  is  as 
follows: 

We  do  hereby  voluntarily  submit  the  same  and  all  matters  concerning  the  same 

to 

as  Arbitrator,  selected  by  us  from  the  "List  of  Official  Arbitrators,"  compiled 
and  established  by  the  Committee  on  Arbitration  of  the  Chamber  of  Commerce 
of  the  State  of  New  York,  for  hearing  and  decision  pursuant  to  the  By-Laws  of 
the  Chamber  of  Commerce  of  the  State  of  New  York,  and  the  Rules  and  Regu- 
lations adopted  by  the  Committee  on  Arbitration  of  the  Chamber  of  Commerce, 
and  pursuant  to  Chapter  275  of  the  Laws  of  1920  of  the  State  of  New  York,  and 
Chapter  72  of  Consolidated  Laws;  and  we  agree  to  stand  to,  abide  by  and  perform 
the  decision,  award,  order,  orders  and  judgment  that  may  therein  and  thereupon 
be  made  under,  pursuant  and  by  virtue  of,  this  submission. 

We  do  further  agree  that  a  judgment  of  the  Supreme  Court  of  the  State  of  New 
York  may  be  entered  in  any  County  in  the  State  of  New  York  thereon. 

Dated,  New  York, 


CORPORATION  ACKNOWLEDGMENT. 

State  of  New  York,       ] 

^ss: 
County  of  New  York, J 

On  this day  of ,  19....,  before  me  personally 

came  and  appeared to  me  known  and  known  to  me  to  be 

the  person  who  executed  the  foregoing  instrument,  who,  being  duly  sworn,  did 

depose  and  say  that  he  is  the of  the  above 

named  corporation  and  that  the  seal  affixed  to  the  foregoing  instrument  is  the  cor- 
porate seal  of  said  corporation  and  that  he  was  duly  authorized  to  sign  and  seal 
the  said  instrument  in  behalf  of  the  said  corporation  by  the  authority  of  the  said 

Board  of  Directors  and  said acknowledged 

said  instrument  to  be  the  free  act  and  deed  of  said  corporation. 
Subscribed  and  Sworn  to  before  me 
this day  of ,  19... 


(Name  of  Officer  signing.) 
Seal  Notary  Public. 

309 


COMMERCIAL   ARBITRATION 

ACKNOWLEDGMENT  BY  PARTNERSHIP. 

State  of  New  York,       ) 


County  of  New  York,  J 

On  this day  of ,  19....,  before  me  personally 

came  and  appeared to  me  known  and  known  to  me  to  be 

the  person  who  executed  the  above  instrument,  who,  being  duly  sworn  by  me,  did 

for  himself  depose  and  say  that  he  is  a  member  of  the  firm  of 

consisting  of  himself  and and  that  he  executed 

the  foregoing  instrument  in  the  firm  name  of 

and  that  he  had  authority  to  sign  same,  and  he  did  duly  acknowledge  to  me  that 

he  executed  the  same  as  the  act  and  deed  of  said  firm  of 

for  the  uses  and  purposes  mentioned  therein. 
Subscribed  and  Sworn  to  before  me 
this day  of ,  19 


(Name  of  signing  Member  of  Firm.) 
Notary  Public. 
Seal  

INDIVIDUAL  ACKNOWLEDGMENT. 
State  of  New  York, 

County  of  New  York, 

On  this day  of ,  19....,  before  me  personally 

came  and  appeared to  me  known  and  known  to  me  to  be 

the  individual  described  in  and  who  executed  the  foregoing  instrument,  and  he 
duly  acknowledged  to  me  that  he  executed  the  same. 

Seal  ; 

Notary  Public. 
FORM  B. 

The  Committee  on  Arbitration  of  the  Chamber  of  Commerce  of  the  State  of 

New  York, 


and 


Submission. 


A  controversy,  dispute  or  matter  of  difference  between  the  undersigned  having 
arisen  and  relating  to  a  subject  matter  the  nature  of  which,  briefly  stated,  is  as 
follows: 

We  do  hereby  voluntarily  submit  the  same  and  all  matters  concerning  the  same 

to and who  shall  select  a  third 

arbitrator  from  the  "List  of  Official  Arbitrators."  compiled  and  established  by 
the  Committee  on  Arbitration  of  the  Chamber  of  Commerce  of  the  State  of  New 
York,  for  hearing  and  decision  pursuant  to  the  By-laws  of  the  Chamber  of  Com- 
merce of  the  State  of  New  York,  and  the  Rules  and  Regulations  adopted  by  the 
Committee  on  Arbitration  of  the  Chamber  of  Commerce,  and  pursuant  to  Chapter 
275  of  the  Laws  of  1920  of  the  State  of  New  York,  and  Chapter  72  of  the  Consoli- 
dated Laws;  and  we  agree  to  stand  to,  abide  by  and  perform  the  decision,  award, 
order,  orders  and  judgment  that  may  therein  and  thereupon  be  made  under, 
pursuant  and  by  virtue  of,  this  submission. 

We  do  further  agree  that  a  judgment  of  the  Supreme  Court  of  the  State  of 
New  York  may  be  entered  in  any  County  in  the  State  of  New  York  thereon. 

Dated,  New  York 


310 


APPENDIX 

CORPORATION  ACKNOWLEDGMENT. 
State  of  New  York 


County   of   New   York,, 

On  this day  of ,  19....,  before  me  personally 

came  and  appeared to  me  known  and  known  to  me  to 

be  the  person  who  executed  the  foregoing  instrument,  who,  being  duly  sworn,  did 

depose  and  say  that  he  is  the of  the  above 

named  corporation  and  that  the  seal  affixed  to  the  foregoing  instrument  is  the 
corporate  seal  of  said  corporation  and  that  he  was  duly  authorized  to  sign  and 
seal  the  said  instrument  in  behalf  of  the  said  corporation  by  the  authority  of  the 

said  Board  of  Directors  and  said 

acknowledged  said  instrument  to  be  the  free  act  and  deed  of  said  corporation. 
Subscribed  and  Sworn  to  before  me 

this day    of ,    19 


(Name  of  Officer  Signing.) 
Seal  Notary  Public. 


ACKNOWLEDGMENT  BY  PARTNERSHIP. 

State  of  New  York, 

j-ss: 

County    OF    NEW    Y^ORkJ 

On  this day  of 19....,  before  me  personally 

came  and  appeared to  me  known  and  known  to  me  to  be 

the  person  who  executed  the  above  instrument,  who,  being  duly  sworn  by  me,  did 

for  himself  depose  and  say  that  he  is  a  member  of  the  firm  of 

consisting  of  himself  and and  that  he  executed 

the  foregoing  instrument  in  the  firm  name  of 

and  that  he  had  authority  to  sign  same,  and  he  did  duly  acknowledge  to  me  that 

he  executed  the  same  as  the  act  and  deed  of  said  firm  of 

for  the  uses  and  purposes  mentioned  therein. 
Subscribed  and  Sworn  to  before  me 

this day  of ,  19 


(Name  of  signing  Member  of  Firm.) 
Seal  Notary  Public. 


INDIVIDUAL  ACKNOWLEDGMENT. 

State  of  New  York, 

ss: 
County  of  New  York, 

On  this day  of 19....,  before  me  personally 

came  and  appeared to  me  known  and  known  to  me  to  be 

the  individual  described  in  and  who  executed  the  foregoing  instrument,  and  he 
duly  acknowledged  to  me  that  he  executed  the  same. 


Seal  Notary  Public. 

NEW  YORK  PRODUCE  EXCHANGE 

AN  AGREEMENT. 

To  Submit  to.  and  Abide  by,  the  Decision  of  the  Arbitration  Committee  of 
the  New  York  Produce  Exchange. 

We,  the  undersigned,  members  of  the  New  York  Produce  Exchange,  hereby 
agree  to  submit,  and  do  voluntarily  submit  to  the  Arbitration  Committee  of  the 
New  York  Produce  Exchange  for  their  consideration  and  adjudication: 

311 


COMMERCIAL   ARBITRATION 


and  we  hereby  bind  ourselves,  heirs,  executors,  or  assigns,  to  abide  by  such  decision 
as  the  said  Committee  may  render;  and  in  the  event  of  a  failure  to  comply  with 
such  decision  by  either,  we  hereby  authorize  and  empower  the  said  Committee 
to  assess,  and  award  the  damages  arising  therefrom;  and  we  hereby  further  bind 
ourselves,  heirs,  executors,  or  assigns  to  abide  by  such  assessment  and  award  as 
the  said  Committee  may  render,  and  agree  that  a  judgment  of  the  Supreme  Court 
be  rendered  upon  the  award  made  pursuant  to  this  submission. 

Signed  in  the  presence  of  


New  York, 19.... 

CORPORATION  ACKNOWLEDGMENT 
State  of  New  York,       ) 


County  of  New  Ycrk,; 

On  the day  of 19....,  before  me  personally 

came to  me  known,  who,  being  by  me  duly  sworn  did 

depose  and  say,  that  he  resided  in ;  that 

he  is  the of the  corporation  described  in  and 

which  executed  the  above  instrument;  that  he  knew  the  seal  of  said  corporation; 
that  the  seal  affixed  to  said  instrument  was  such  corporate  seal;  that  it  was  so 

affixed  by  order  of  the  Board  of of  the  said  corporation, 

and  that  he  signed  his  name  thereto  by  like  order. 
State  of  New  York,       ) 


County  of  New  York, 

On  the day  of 19....,  before  me  personally 

came to  me  known,  who,  being  by  me  duly  sworn  did 

depose  and  say,  that  he  resided  in ;  that 

he  is  the of the  corporation 

described  in  and  which  executed  the  above  instrument;  that  he  knew  the  seal  of 
said  corporation;  that  the  seal  affixed  to  said  instrument  was  such  corporate  seal; 

that  it  was  so  affixed  by  order  of  the  Board  of of  the 

said  corporation,  and  that  he  signed  his  name  thereto  by  like  order. 
State  of  New  York,       ] 

County  of  New  York,  J 

FIRM  ACKNOWLEDGMENT. 

On  this day  of 19....,  before  me  personally 

came to  me  known  and  known  to  me  to  be  a  member 

of  the  firm  of the  firm  described  in  and  which  executed 

the  foregoing  instrument,  and  said acknowledged  that 

he  executed  the  foregoing  instrument  for  and  on  behalf  of  said  firm. 
State  of  New  York, 

County  of  New  York, 

On  this day  of 19....,  before  me  personally 

came to  me  known  and  known  to  me  to  be  a  member 

of  the  firm  of the  firm  described  in  and  which  executed 

the  foregoing  instrument,  and  said acknowledged  that 

he  executed  the  foregoing  instrument  for  and  on  behalf  of  said  firm. 

312 


APPENDIX 

INDIVIDUAL  ACKNOWLEDGMENT. 

State  of  New  York,       ) 


County  of  New  York, 

On  the day  of 19....,  before  me  personally 

came to  me  known  and  known  to  me  to  be  the 

same  person  described  in  and  who  executed  the  foregoing  instrument  and  he  duly 
acknowledged  to  me  that  he  executed  the  same. 
State  of  New  York, 


County  of  New  York, J 

On  the day  of 19....,  before  me  personally 

came to  me  known  and  known  to  me  to  be  the 

same  person  described  in  and  who  executed  the  foregoing  instrument  and  he  duly 
acknowledged  to  me  that  he  executed  the  same. 

AGREEMENT  TO  SUBMIT  TO  ARBITRATION. 
We,  the  undersigned,  hereby  mutually  covenant  and  agree  to  submit,  and 
hereby  do  submit  to 

as  Arbitrators,  for  their  adjudication  and  award,  a  controversy  existing  between 
us  relating  to 


And  we  mutually  covenant  and  promise  that  the  award  to  be  made  by  said 
Arbitrators  or  by  a  majority  of  them,  shall  be  well  and  faithfully  kept  and  observed 
by  us,  and  by  each  of  us. 

And  it  is  hereby  further  mutually  agreed  that  a  judgment  of  the  Supreme  Court 
of  the  State  of  New  York  shall  be  rendered  upon  the  award  made  pursuant  to  this 
submission. 

Witness  our  hands  this day  of 19.... 

Signed  in  the  presence  of 


NOTE. — This  agreement  must  be  asknowledged  before  a  Notary. 

The  Arbitrators  must  be  sworn  or  their  oath  waived  in  writing. 

CORPORATION  ACKNOWLEDGMENT. 

State*  of  New  York, 

■ss: 
County  of  New  York, 

On  the day  of 19....,  before  me  personally 

came to  me  known,  who,  being  by  me  duly 

sworn  did  depose  and  say,  that  he  resided  in ;  that 

he  is  the of 

the  corporation  described  in  and  which  executed  the  above  instrument;  that  he 
knew  the  seal  of  said  corporation;  that  the  seal  affixed  to  said  instrument  was  such 

corporate  seal;  that  it  was  so  affixed  by  order  of  the  Board  of 

of  the  said  corporation,  and  that  he  signed  his  name  thereto  by  like  order. 
State  of  New  York,       1 

[ss: 
County  of  New  York,  J 

On  the day  of 19....,  before  me  personally 

came to  me   known,   who,   being  by  me  duly 

313 


COMMERCIAL   ARBITRATION 

sworn  did  depose  and  say,  that  he  resided  in ; 

that  he  is  the ...of .' 

the  corporation  described  in  and  which  executed  the  above  instrument;  that  he 
knew  the  seal  of  said  corporation;  that  the  seal  affixed  to  said  instrument  was  such 

corporate  seal;  that  it  was  so  affixed  by  order  of  the  Board  of 

of  the  said  corporation,  and  that  he  signed  his  name  thereto  by  like  order. 

FIRM  ACKNOWLEDGMENT. 

State  of  New  York,       ) 


County  of  New  York, 

On  this day  of 19....,  before  me  personally 

came to  me  known  and  known  to  me  to  be  a 

member  of  the  firm  of the  firm  described  in  and 

which  executed  the  foregoing  instrument,  and  said 

acknowledged  that  he  executed  the  foregoing  instrument  for  and  on  behalf  of  said 

firm. 

State  of  New  York,       ) 


County  of  New  York,, 

On  this day  of 19....,  before  me  personally 

came to  me  known  and  known  to  me  to  be  a 

member  of  the  firm  of the  firm  described  in  and 

which  executed  the  foregoing  instrument,  and  said 

acknowledged  that  he  executed  the  foregoing  instrument  for  and  on  behalf  of  said 
firm. 

INDIVIDUAL  ACKNOWLEDGMENT. 

State  of  New  York,       ] 


County  of  New  York,j 

On  the day  of 19....,  before  me  personally 

came to  me  known  and  known  to  me  to  be  the 

same  person  described  in  and  who  executed  the  foregoing  instrument  and  he  duly 
acknowledged  to  me  that  he  executed  the  same. 
State  of  New  York,       ) 

[■««.' 
County  of  New  York,] 

On  the day  of 19....,  before  me  personally 

came to  me  known  and  known  to  me  to  be  the 

same  person  described  in  and  who  executed  the  foregoing  instrument  and  he  duly 
acknowledged  to  me  that  he  executed  the  same. 

FOREIGN  COMMERCE  ASSOCIATION  OF 
THE  PACIFIC  COAST 

San  Francisco  and  Seattle 

192 


The  undersigned  hereby  requests  that  an  arbitration  be  held  at 

before  the  Foreign  Commerce  Association 

of  the  Pacific  Coast  and  under  the  rules  of  said  Association  in  the  matter  of 

and  hereby  agrees  and  promises  absolutely  to  abide  by  the  award  and  findings  of 
the  arbitrators,  and  in  the  event  of  an  adverse  decision,  to  make  prompt  settle- 
ment and  likewise  pay  the  fees  and  costs  as  provided  for  in  the  Rules  of  said 
Association. 

Check  for  $50.00  for  deposit  on  account  of  said  arbitration  fee  enclosed  here- 
with. 

Signed 

By 

314 


APPENDIX 

CALIFORNIA  BEAN  DEALERS  ASSOCIATION 

192 

The  undersigned  having  consented  that  an  arbitration  be  held  through  the 
CALIFORNIA  BEAN  DEALER'S  ASSOCIATION,  and  under  the  rules  and 
regulations  of  said  Association  in  the  matter  of t 

hereby  agrees  and  promises  absolutely  to  abide  by  the  award  and  findings  of  the 
arbitrators,  and  in  the  event  of  an  adverse  decision,  to  make  prompt  settlement 
and  likewise  pay  the  fees  and  costs  as  provided  for  in  the  Rules  and  Regulations 
of  said  Association. 


By 

BOARD  OF  TRADE  OF  THE  CITY  OF  CHICAGO 

Chicago, 19 

Mr.  John  R.  Mauff,  Secretary, 
Dear    Sir: 

You  are  hereby  notified  that  the  services  of  the  Committee  of  Arbitration 
of  the  Board  of  Trade  of  the  City  of  Chicago  are  desired  to  decide  a  difference 

between 

and 

in  relation  to 

Amount  claimed  $ 

NEW  ORLEANS  BOARD  OF  TRADE 

Xew  Orleans, 19 

) 

Agreement  in  Arbitration. 


vs. 


The  services  of  the  Committee  on  Arbitration  having  been  solicited  to  hear 
and  adjudicate  upon  a  claim  presented  by  the  undersigned: 

against  the  undersigned 

as  set  forth  in  the  statement  hereto  attached,  we,  the  said  parties,  do  hereby 
bind  ourselves  to  abide,  perform  and  fulfill  the  final  award  or  finding  which  shall 
be  made  touching  the  matter  submitted,  and  the  rules  of  the  Association  governing 
in  such  matters,  without  recourse  to  any  other  court  or  tribunal,  and  subject  only 
to  the  right  of  appeal  to  the  Committee  on  Appeals  of  this  Board. 


315 


COMMERCIAL   ARBITRATION 

AN  ACT 

In  relation  to  arbitration,  constituting  chapter  seventy-two  of  the 
consolidated  laws;  repealing  Sections  2883,  2884,  and  2885  of  Chapter 
17,  title  8,  of  the  Code  of  Civil  Procedure,  and  amending  Section 
2382  thereof. 

Unanimously  passed  by  the  Senate  of  the  State  of  New  York,  March  26, 
1920;  by  the  Assembly  April  14,  1920,  and  signed  by  the  Governor 
April  19,  1920. 
The  People  of  the  State  of  New    York,  represented  in  Senate  and 

Assembly  do  enact  as  follows: 

CHAPTER  72  OF  THE  CONSOLIDATED  LAWS. 
Arbitration  Law. 

Article     1.     Short  title   (§1). 

2.  General  provisions  (§§2-6). 

3.  Application  of  certain  sections  of  the  code  of  civil  procedure 

and  repeal  of  certain  other  provisions  thereof  (§§7-9). 

4.  Time  of  taking  effect  (§10). 

ARTICLE  1. 
Short  Title. 
Section  1.     Short  title. 

Section  1.  Short  title.  This  chapter  shall  be  known  as  the 
" Arbitration  Law." 

ARTICLE  2. 
General  Provisions. 
Section    2.     Validity  of  arbitration  agreements. 

3.  Remedy  in  case  of  default. 

4.  Provision  in  case  of  failure  to  name  arbitrator  or  umpire. 

5.  Stay  of  proceedings  brought  in  violation  of  an  arbitration 

agreement  or  submission. 

6.  Application  to  be  heard  as  motions. 

§2.  Validity  of  arbitration  agreements.  A  provision  in  a  written 
contract  to  settle  by  arbitration  a  controversy  thereafter  arising  between 
the  parties  to  the  contract,  or  a  submission  hereafter  entered  into  of 
an  existing  controversy  to  arbitration  pursuant  to  title  eight  of  chapter 
seventeen  of  the  code  of  civil  procedure,  shall  be  valid,  enforcible  and 
irrevocable,  save  upon  such  grounds  as  exist  at  law  or  in  equity  for  the 
revocation  of  any  contract. 

§3.  Remedy  in  case  of  default.  A  party  aggrieved  by  the  failure, 
neglect  or  refusal  of  another  to  perform  under  a  contract  or  submission 
providing  for  arbitration,  described  in  section  two  hereof,  may  petition 

316 


APPENDIX 

the  supreme  court,  or  a  judge  thereof,  for  an  order  directing  that  such 
arbitration  proceed  in  the  manner  provided  for  in  such  contract  or  sub- 
mission. Eight  days'  notice  in  writing  of  such  application  shall  be 
served  upon  the  party  in  default.  Service  thereof  shall  be  made  in  the 
manner  provided  by  law  for  personal  service  of  a  summons.  The  court, 
or  a  judge  thereof,  shall  hear  the  parties,  and  upon  being  satisfied  that 
the  making  of  the  contract  or  submission  or  the  failure  to  comply  there- 
with is  not  in  issue,  the  court,  or  the  judge  thereof,  hearing  such  appli- 
cation, shall  make  an  order  directing  the  parties  to  proceed  to  arbitration 
in  accordance  with  the  terms  of  the  contract  or  submission.  If  the 
making  of  the  contract  or  submission  or  the  default  be  in  issue,  the 
court,  or  the  judge  thereof,  shall  proceed  summarily  to  the  trial  thereof. 
If  no  jury  trial  be  demanded  by  either  party,  the  court,  or  the  judge 
thereof,  shall  hear  and  determine  such  issue.  Where  such  an  issue  is 
raised,  any  party  may,  on  or  before  the  return  day  of  the  notice  of  appli- 
cation, demand  a  jury  trial  of  such  issue,  and  if  such  demand  be  made, 
the  court,  or  the  judge  thereof,  shall  make  an  order  referring  the  issue 
or  issues  to  a  jury  in  the  manner  provided  by  law  for  referring  to  a  jury 
issues  in  an  equity  action.  If  the  jury  find  that  no  written  contract  pro- 
viding for  arbitration  was  made  or  submission  entered  into,  as  the  case 
may  be,  or  that  there  is  no  default,  the  proceeding  shall  be  dismissed. 
If  the  jury  find  that  a  written  contract  providing  for  arbitration  was 
made  or  submission  was  entered  into  and  there  is  a  default  in  the  per- 
formance thereof,  the  court,  or  the  judge  thereof,  shall  make  an  order 
summarily  directing  the  parties  to  the  contract  or  submission  to  proceed 
with  the  arbitration  in  accordance  with  the  terms  thereof. 

§4.  Provision  in  case  of  failure  to  name  arbitrator  or  umpire.  If, 
m  the  contract  for  arbitration  or  in  the  submission,  described  in  section 
two,  provision  be  made  for  a  method  of  naming  or  appointing  an  arbi- 
trator or  arbitrators  or  an  umpire,  such  method  shall  be  followed;  but 
if  no  method  be  provided  therein,  or  if  a  method  be  provided  and  any 
party  thereto  shall  fail  to  avail  himself  of  such  method,  or  for  any  other 
reason  there  shall  be  a  lapse  in  the  naming  of  an  arbitrator  or  arbitrators 
or  umpire,  or  in  filling  a  vacancy,  then,  upon  application  by  either  party 
to  the  controversy,  the  supreme  court,  or  a  judge  thereof,  shall  designate 
and  appoint  an  arbitrator  or  arbitrators  or  umpire,  as  the  case  may 
require,  who  shall  act  under  the  said  contract  or  submission  with  the 
same  force  and  effect  as  if  he  or  they  had  been  specifically  named 
therein;  and  unless  otherwise  provided,  the  arbitration  shall  be  by 
a  single  arbitrator. 

317     ' 


COMMERCIAL   ARBITRATION 

§5.  Stay  of  proceedings  brought  in  violation  of  an  arbitration  agree- 
ment or  submission.  If  any  suit  or  proceeding  be  brought  upon  any 
issue  otherwise  referable  to  arbitration  under  a  contract  or  submission 
described  in  section  two,  the  supreme  court,  or  a  judge  thereof,  upon 
being  satisfied  that  the  issue  involved  in  such  suit  or  proceeding  is  refer- 
able to  arbitration  under  a  contract  containing  a  provision  for  arbitration 
or  under  a  submission  described  in  section  two,  shall  stay  the  trial  of 
the  action  until  such  arbitration  has  been  had  in  accordance  with  the 
terms  of  the  agreement. 

§6.  Applications  to  be  heard  as  motions.  Any  application  to  the 
court,  or  a  judge  thereof,  hereunder  shall  be  made  and  heard  in  the 
manner  provided  by  law  for  the  making  and  hearing  of  motions,  except 
as  otherwise  herein  expressly  provided. 

ARTICLE  3. 
Application  of  Certain  Sections  of  the  Code  of  Civil  Proced- 
ure and  Repeal  and  Amendment  of  Certain  Other  Provisions 
Thereof. 

Section    7.     Repeal  of  provisions  of  code  of  civil  procedure. 

8.  Application  of  certain  sections  of  code  of  civil  procedure. 

9.  Amendment  of  certain  section  of  code  of  civil  procedure. 
§7.     Repeal   of  provisions   of   code   of   civil   procedure.     Sections 

twenty-three  hundred  and  eighty-three,  twenty-three  hundred  and 
eighty-four  and  twenty-three  hundred  and  eighty-five  of  chapter  seven- 
teen, title  eight,  of  the  code  of  civil  procedure  are  hereby  repealed. 

§8.  Application  of  certain  sections  of  code  of  civil  procedure. 
The  provisions  of  sections  twenty-three  hundred  and  sixty-five  to 
twenty-three  hundred  and  eighty-six  of  the  code  of  civil  procedure, 
both  inclusive,  except  sections  twenty-three  hundred  and  eighty-three, 
twenty-three  hundred  and  eighty-four  and  twenty-three  hundred  and 
eighty-five,  so  far  as  practicable  and  consistent  with  this  chapter, 
shall  apply  to  an  arbitration  agreement  under  this  chapter,  and  for 
such  purpose  the  arbitration  agreement  shall  be  deemed  a  submission 
to  arbitration.  Wherever  in  such  sections  reference  is  made  to  the 
court  specified  in  the  submission,  the  supreme  court  shall  have  juris- 
diction of  the  subject  matter  if  no  court  be  specified  in  the  arbitration 
agreement. 

§9.  Amendment  of  certain  section  of  code  of  civil  procedure. 
Section  twenty-three  hundred  and  eighty-two  of  the  code  of  civil  pro- 
cedure is  hereby  amended  to  read  as  follows: 

318 


APPENDIX 

§2382.  (The  death  of  a  party  to  a  submission,  made  either  as 
prescribed  in  this  title  or  otherwise,  or  the  appointment  of  a  committee 
of  the  person  or  property  of  such  a  party,  as  prescribed  in  title  sixth  of 
this  chapter,  operates  as  a  revocation  of  the  submission,  if  it  occurs 
before  the  award  is  filed  or  delivered  but  not  afterwards.)  Where  a 
party  dies  (afterwards)  after  making  a  submission  either  as  prescribed 
in  this  title  or  otherwise,  if  the  submission  contains  a  stipulation,  authoriz- 
ing the  entry  of  a  judgment  upon  the  award,  the  award  may  be  con- 
firmed, vacated,  modified,  or  corrected,  upon  the  application  of,  or  upon 
notice  to,  his  executor  or  administrator,  or  a  temporary  administrator 
of  his  estate;  or,  where  it  relates  to  real  property,  his  heir  or  devisee 
who  has  succeeded  to  his  interest  in  the  real  property.  Where  a  com- 
mittee of  the  property,  or  of  the  person,  of  a  party  to  a  submission  is 
appointed,  (after  the  award  is  filed  or  delivered,)  the  award  may  be 
confirmed,  vacated,  modified,  or  corrected,  upon  the  application  of, 
or  notice  to,  a  committee  of  the  property;  but  not  otherwise.  In  a  case 
specified  in  this  section,  a  judge  of  the  court  may  make  an  order? 
extending  the  time  within  which  notice  of  a  motion  to  vacate,  modify 
or  correct  the  award  must  be  served.  Upon  confirming  an  award, 
where  a  party  has  died  since  it  was  filed  or  delivered,  the  court  must 
enter  judgment  in  the  name  of  the  original  party;  and  the  proceedings 
thereupon  are  the  same,  as  where  a  party  dies  after  a  verdict. 

ARTICLE  4. 
Time  of  Taking  Effect. 
Section  10.     Time  of  taking  effect. 

§10.     Time  of  taking  effect.     This  act  shall  take  effect  immediately. 


319 


COMMERCIAL  ARBITRATION 


American  Foreign  Trade  Definitions 

adopted  at  a  conference  participated  in  by  the  National  Foreign 
Trade  Council,  Chamber  of  Commerce  of  the  U.  S.  A.,  National 
Association  of  Manufacturers,  American  Manufacturers'  Export 
Association,  Philadelphia  Commercial  Museum,  American  Ex- 
porters' and  Importers'  Association,  Chamber  of  Commerce 
of  the  State  of  N.  Y.,  N.  Y.  Produce  Exchange,  and  N.  Y.  Mer- 
chants' Association,  held  in  India  House,  N.  Y.,  on  December 

16,    1919. 

********* 

As  the  most  certain  means  of  insuring  unmistakable  clarity  in  terms 
and  conditions  of  sale,  the  Conference  voted  to  recommend  to  manu- 
facturers and  exporters  that  all  use  of  abbreviated  forms  of  export 
price  quotations  be  abandoned,  and  that  such  terms  be  written  out  in  full. 

The  Conference  recognized,  however,  that  this  recommendation 
is  not  likely  to  be  accepted  generally  at  once;  and  therefore,  in  the 
hope  of  effecting  a  simplification  and  standardization  of  American 
practice,  it  adopted  the  following  statement  of  definitions  of  the  abbre- 
viated forms  in  more  common  and  general  use  in  the  export  trade. 
The  Conference  strongly  recommends  to  manufacturers  and  exporters 
that  wherever  abbreviated  forms  of  export  quotations  are  employed, 
the  forms  herein  denned  be  used,  as  far  as  possible,  to  the  exclusion  of 
other  forms. 

DEFINITIONS  OF  EXPORT  QUOTATIONS 

These  are,  in  their  order,  the  normal  situations  on  which  an  export 
manufacturer  or  shipper  may  desire  to  quote  prices.  It  is  understood 
that  unless  a  particular  railroad  is  specified,  the  property  will  be  deliv- 
ered to  the  carrier  most  conveniently  located  to  the  shipper.  If  the 
buyer,  for  the  purpose  of  delivery,  or  in  order  to  obtain  lower  trans- 
portation charges,  desires  that  the  goods  be  delivered  to  a  carrier 
further  removed  from  the  shipper  and  entailing  a  greater  cost  than 
delivery  to  the  carrier  most  favorably  situated,  the  carrier  to  which 
the  buyer  desires  delivery  of  the  goods  should  be  named  in  the  quota- 
tion. The  term  "cars  or  lighters"  as  used  herein,  is  intended  to  include 
River,  Lake  or  Coastwise  ships,  canal  boats,  barges,  or  other  means 
of  transportation,  when  so  specified  in  the  quotation. 

1.  When  the  price  quoted  applies  only  at  inland  shipping  point 
and  the  seller  merely  undertakes  to  load  the  goods  on  or  in  cars  or 

320 


APPENDIX 

lighters  furnished  by  the  railroad  company  serving  the  industry,  or 
most  conveniently  located  to  the  industry,  without  other  designation 
as  to  routing,  the  proper  term  is: 

"F.  O.  B.  (named  point)" 
Under  this  quotation: 

A.  Seller  must 

(1)  place  goods  on  or  in  cars  or  lighters 

(2)  secure  railroad  bill  of  lading 

(3)  be  responsible  for  loss  and /or  damage  until  goods  have 
been  placed  in  or  on  cars  or  lighters  at  forwarding  point, 
and  clean  bill  of  lading  has  been  furnished  by  the  railroad 
company. 

B.  Buyer  must 

(1)  be  responsible  for  loss  and/or  damage  incurred  thereafter 

(2)  pay  all  transportation  charges  including  taxes,  if  any 

(3)  handle  all  subsequent  movement  of  the  goods. 

2.  When  the  seller  quotes  a  price  including  transportation  charges  to 
the  port  of  exportation  without  assuming  responsibility  for  the  goods  after 
obtaining  a  clean  bill  of  lading  at  point  of  origin,  the  proper  term  is: 
"F.  O.   B.   (named  point)  Freight  Prepaid  to   (named  point  on  the 

seaboard)" 
Under  this  quotation: 

A.  Seller  must 

(1)  place  goods  on  or  in  cars  or  lighters 

(2)  secure  railroad  bill  of  lading 

(3)  pay  freight  to  named  port 

(4)  be  responsible  for  loss  and/or  damage  until  goods  have 
been  placed  in  or  on  cars  or  lighters  at  forwarding  point, 
and  clean  bill  of  lading  has  been  furnished  by  the  railroad 
company 

B.  Buyer  must 

(1)  be  responsible  for  loss  and/or  damage  incurred  thereafter 

(2)  handle  all  subsequent  movement  of  the  goods 

(3)  unload  goods  from  cars 

(4)  transport  goods  to  vessels 

(5)  pay  all  demurrage  and  /or  storage  charges 

(6)  arrange  for  storage  in  warehouse  or  on  wharf  where 
necessary 

3.  Where  the  seller  wishes  to  quote  a  price,  from  which  the  buyer 
may  deduct  the  cost  of  transportation  to  a  given  point  on  the  seaboard, 

321 


COMMERCIAL   ARBITRATION 

without  the  seller  assuming  responsibility  for  the  goods  after  obtaining 
a  clean  bill  of  lading  at  point  of  origin,  the  proper  term  is: 
"F.  O.  B.   (named  point)  Freight  Allowed  to   (named  point  on  the 

seaboard)" 
Under  this  quotation: 

A.  Seller  must 

(1)  place  goods  on  or  in  cars  or  lighters 

(2)  secure  railroad  bill  of  lading 

(3)  be  responsible  for  loss  and/or  damage  until  goods  have 
been  placed  in  or  on  cars  or  lighters  at  forwarding  point, 
and  clean  bill  of  lading  has  been  furnished  by  the  railroad 
company 

B.  Buyer  must 

(1)  be  responsible  for  loss  and/or  damage  incurred  thereafter 

(2)  pay  all  transportation  charges  (buyer  is  then  entitled  to 
deduct  from  the  amount  of  the  invoice  the  freight 
paid  from  primary  point  to  named  port) 

(3)  handle  all  subsequent  movement  of  the  goods 

(4)  unload  goods  from  cars 

(5)  transport  goods  to  vessel 

(6)  pay  all  demurrage  and/or  storage  charges 

(7)  arrange  for  storage  in  warehouse  or  on  wharf  where 
necessary 

4.     The  seller  may  desire  to  quote  a  price  covering  the  transporta- 
tion of  the  goods  to  seaboard,  assuming  responsibility  for  loss  and/or 
damage  up  to  that  point.     In  this  case,  the  proper  term  is: 
"F.  O.  B.  Cars  (named  point  on  seaboard)" 

Under  this  quotation : 

A.  Seller  must 

(1)  place  goods  on  or  in  cars 

(2)  secure  railroad  bill  of  lading 

(3)  pay  all  freight  charges  from  forwarding  point  to  port  on 
seaboard 

(4)  be  responsible  for  loss  and/or  damage  until  goods  have 
arrived  in  or  on  cars  at  the  named  port 

B.  Buyer  must 

(1)  be  responsible  for  loss  and/or  damage  incurred  thereafter 

(2)  unload  goods  from  cars 

(3)  handle  all  subsequent  movement  of  the  goods 

(4)  transport  goods  to  vessel 

(5)  pay  all  demurrage  and/or  storage  charges 

322 


APPENDIX 

(6)  arrange  for  storage  in  warehouse  or  on  wharf  where 
necessary 
5.'    It  may  be  that  the  goods,  on  which  a  price  is  quoted  covering 
the  transportation  of  the  goods  to  the  seaboard,  constitute  less  than  a 
carload  lot.     In  this  case,  the  proper  term  is: 

"F.  O.  B.  Cars  (named  port)   L.  C.  L." 
Under  this  quotation: 

A.  Seller  must 

(1)  deliver  goods  to  the  initial  carrier 

(2)  secure  railroad  bill  of  lading 

(3)  pay  all  freight  charges  from  forwarding  point  to  port  on 
seaboard 

(4)  be  responsible  for  loss  and/or  damage  until  goods  have 
arrived  on  cars  at  the  named  port 

B.  Buyer  must 

(1)  be  responsible  for  loss  and/or  damage  incurred  thereafter 

(2)  handle  all  subsequent  movement  of  the  goods 

(3)  accept  goods  from  the  carrier 

(4)  transport  goods  to  vessel 

(5)  pay  all  storage  charges 

(6)  arrange  for  storage  in  warehouse  or  on  wharf  where 
necessary 

6.  Seller  may  quote  a  price  which  will  include  the  expense  of 
transportation  of  the  goods  by  rail  to  the  seaboard,  including  lighterage. 
In  this  case,  the  proper  term  is: 

"F.    0.    B.    Cars    (named    port)    Lighterage   Free" 

Under  this  quotation: 

A.  Seller  must 

(1)  place  goods  on  or  in  cars 

(2)  secure  railroad  bill  of  lading 

(3)  pay  all  transportation  charges  to,  including  lighterage 
at,  the  port  named. 

(4)  be  responsible  for  loss  and /or  damage  until  goods  have 
arrived  on  cars  at  the  named  port 

B.  Buyer  must 

(1)  be  responsible  for  loss  and/or  damage  incurred  thereafter 

(2)  handle  all  subsequent  movement  of  the  goods 

(3)  take  out  the  insurance  necessary  to  the  safety  of  the 
goods  after  arrival  on  the  cars 

(4)  pay  the  cost  of  hoisting  goods  into  vessel  where  weight 
of  goods  is  too  great  for  ship's  tackle 

323 


COMMERCIAL   ARBITRATION 

(5)  pay  all  demurrage  and  other  charges,  except  lighterage 
charges 

7.  The  seller  may  desire  to  quote  a  price  covering  delivery  of  the 
goods  alongside  overseas  vessel  and  within  reach  of  its  loading  tackle. 
In  this  case,  the  proper  term  is : 

"F.  A.  S.  vessel  (named  port)" 
Under  this  quotation: 

A.  Seller  must 

(1)  transport  goods  to  seaboard 

(2)  store  goods  in  warehouse  or  on  wharf  if  necessary,  unless 
buyer's  obligation  includes  provision  of  shipping  fa- 
cilities 

(3)  place  goods  alongside  vessel  either  in  a  lighter  or  on  the 
wharf 

(4)  provide  the  usual  dock  or  ship's  receipt 

(5)  be  responsible  for  loss  and /or  damage  until  goods  have 
been  delivered  alongside  the  ship  or  on  wharf 

B.  Buyer  must 

(1)  be  responsible  for  loss  and/or  damage  thereafter,  and  for 
insurance 

(2)  handle  all  subsequent  movement  of  the  goods 

(3)  pay  cost  of  hoisting  goods  into  vessel  where  weight  of 
goods  is  too  great  for  ship's  tackle 

8.  The  seller  may  desire  to  quote  a  price  covering  all  expenses 
up  to  and  including  delivery  of  the  goods  upon  the  overseas  vessel  at  a 
named  port.   In  this  case,  the  proper  term  is: 

"F.  O.  B.  vessel  (named  port)" 
Under  this  quotation: 

A.  Seller  must 

(1)  meet  all  charges  incurred  in  placing  goods  actually  on 
board  the  vessel 

(2)  provide  the  usual  dock  or  ship's  receipt 

(3)  be  responsible  for  all  loss  and /or  damage  until  goods 
have  been  placed  on  board  the  vessel 

B.  Buyer  must 

(1)  be  responsible  for  loss  and /or  damage  thereafter 

(2)  handle  all  subsequent  movement  of  the  goods 

9.  The  seller  may  be  ready  to  go  farther  than  the  delivery  of  his 
goods  upon  the  overseas  vessel  and  be  willing  to  pay  transportation 
to  a  foreign  point  of  delivery.     In  this  case,  the  proper  term  is: 

324 


APPENDIX 

"C.  &  F.  (named  foreign  port)" 
Under  this  quotation 

A.  Seller  must 

(1)  make  freight  contract  and  pay  transportation  charges 
sufficient  to  carry  goods  to  agreed  destination 

(2)  deliver  to  buyer  or  his  agent  clean  bills  of  lading  to  the 
agreed  destination 

(3)  be  responsible  for  loss  and/or  damage  until  goods  have 
been  delivered  alongside  the  ship  and  clean  ocean  bill 
of  lading  obtained  (seller  is  not  responsible  for  delivery 
of  goods  at  destination) 

B.  Buyer  must 

(1)  be  responsible  for  loss  and/or  damage  thereafter  and 
must  take  out  all  necessary  insurance 

(2)  handle  all  subsequent  movement  of  the  goods 

(3)  take  delivery  and  pay  costs  of  discharge,  lighterage  and 
landing  at  foreign  port  of  destination  in  accordance 
with  bill  of  lading  clauses 

(4)  pay  foreign  customs  duties  and  wharfage  charges,  if  any 
10.     The  seller  may  desire  to  quote  a  price  covering  the  cost  of  the 

goods,   the  marine  insurance  on  the  goods,   and   all  transportation 
charges  to  the  foreign  point  of  delivery.    In  this  case,  the  proper  term  is : 
"C.  I.  F.  (named  foreign  port)" 
Under  this  quotation 
A.     Seller  must 

(1)  make  freight  contract  and  pay  freight  charges  sufficient 
to  carry  goods  to  agreed  destination 

(2)  take  out  and  pay  for  necessary  marine  insurance 

(3)  deliver  to  buyer  or  his  agent  clean  bills  of  lading  to  the 
agreed  destination,  and  insurance  policy  and /or  ne- 
gotiable insurance  certificate 

(4)  be  responsible  for  loss  and/or  damage  until  goods  have 
been  delivered  alongside  the  ship,  and  clean  ocean 
bill  of  lading  and  insurance  policy  and/or  negotiable 
insurance  certificate  have  been  delivered  to  the  buyer, 
or  his  agent.  (Seller  is  not  responsible  for  the  delivery  of 
goods  at  destination,  nor  for  payment  by  the  under- 
writers of  insurance  claims) 

(5)  provide  war  risk  insurance,  where  necessary,  for  buyer's 
account 

325 


COMMERCIAL   ARBITRATION 

B.     Buyer  must 

(1)  be  responsible  for  loss  and /or  damage  thereafter,  and 
must  make  all  claims  to  which  he  may  be  entitled  under 
the  insurance  directly  on  the  underwriters 

(2)  take  delivery  and  pay  costs  of  discharge,  lighterage  and 
landing  at  foreign  port  of  destination  in  accordance 
with  bill  of  lading  clauses 

(3)  pay  foreign  customs  duties  and  wharfage  charges,  if  any 

Explanations  of  Abbreviations 

F.  O.  B Free  on  board 

F.  A.  S Free  along  side 

C.  &  F Cost  and  freight 

C.  I.  F Cost,  insurance  and  freight 

L.  C.  L Less  than  carload  lot 

GENERAL  RECOMMENDATIONS 

In  reaching  the  conclusions  set  forth  in  this  statement  the  Conference 
considered  the  fact  that  there  are,  in  more  or  less  common  use  by 
manufacturers  in  different  parts  of  the  United  States,  numerous  varia- 
tions of  these  abbreviations,  practically  all  of  which  are  employed  to 
convey  meanings  substantially  synonymous  with  those  here  defined. 
For  instance,  there  are  manufacturers  who  quote  "F.  O.  B.  Cars," 
"F.  0.  B.  Works,"  "F.  0.  B.  Mill"  or  UF.  O.  B.  Factory"  meaning 
that  the  seller  and  buyer  have  the  same  responsibilities  as  those  set 
forth  in  Section  1.  The  Conference  considered  all  those  variations  and 
determined  to  recommend  the  use  of  "F.  0.  B.  (named  point),"  as 
"F.  O.  B.  Detroit,"  "F.  O.  B.  Pittsburgh,"  etc.  Of  the  considerable 
number  of  these  abbreviations  which  are  used  in  the  United  States, 
the  Conference  felt  that  the  form  "F.  O.  B.  (named  point)"  is  most 
widely  used  and  understood,  and  therefore  should  be  adopted  as  the 
standard  of  practice. 

The  chief  purpose  of  the  Conference  is  to  simplify  and  standardize 
American  practice,  and  to  that  end  it  urges  manufacturers  and  exporters 
to  cease  the  use  of  synonymous  abbreviations  and  quote  habitually 
in  the  terms  here  recommended,  just  as  far  as  these  terms  will  cover 
the  price  conditions  which  it  is  desired  to  arrange  with  the  buyer. 

Variations  of  the  abbreviations  recommended  in  other  sections  also 
are  in  more  or  less  common  use  throughout  the  United  States.  The 
recommendations  of  the  Conference  set  forth  above  apply  to  them 
with  the  same  force  as  to  those  cited  under  Section  1. 

Manufacturers  and  exporters  are  urged  to  bear  in  mind  that  the 
confusion  and  controversies  which  have  arisen  have  sprung  in  part 


APPENDIX 

from  the  use  of  an  excessive  number  of  abbreviated  forms  with  sub- 
stantially similar  meanings,  as  well  as  from  the  use  of  abbreviations 
in  a  sense  different  from  their  original  meanings,  or  in  an  application 
not  originally  given  them  and  different  from  the  sense  or  application 
understood  by  foreign  buyers. 

In  simplified  and  standardized  practice  lies  the  best  hope  of  reducing 
confusion  and  avoiding  controversy. 

The  Conference  urges  upon  manufacturers  and  exporters  the  very 
great  importance  at  all  times  of  making  their  intention  in  whatever 
quotations  they  employ  so  thoroughly  clear  as  to  be  impossible  of 
misunderstanding  or  misinterpretation.  It  is  much  better  to  take  the 
time  and  space  at  the  outset  to  make  the  quotation  clearly  understood, 
than  to  be  compelled  in  the  end  to  go  through  vexatious  controversy 
or  litigation,  which  costs  not  only  time  and  expense  but  customers  as 
well.  Misunderstandings  can  best  be  avoided  if  the  seller  will  formulate 
a  written  statement  of  the  general  conditions  under  which  his  sales 
are  to  be  made,  and  will  see  that  the  foreign  buyer  possesses  these 
terms  of  sale  when  considering  a  quotation.  The  items  which  may  be 
included  in  such  a  statement,  deal  with:  delivery,  delays,  partial  ship- 
ments, shipping  instructions,  inspection,  claims,  damage,  and  payment. 
If  all  contingencies  are  thus  covered  by  carefully  considered  conditions 
of  sale,  disputes  will  largely  be  prevented. 

The  quotation  "F.  O.  B.  (named  port)"  as  "F.  O.  B.  New  York," 
"F.  O.  B.  New  Orleans,"  "F.  O.  B.  San  Francisco,"  is  often  used  by 
inland  producers  and  distributors  to  mean  merely  delivery  of  the  goods 
at  railway  terminal  at  the  port  named.  This  abbreviation  originated 
as  an  export  quotation  and  had  no  application  to  inland  shipments. 
It  was  used  only  to  mean  delivery  of  the  goods  upon  an  overseas  vessel 
at  the  port  named.  That,  in  fact,  is  the  meaning  universally  given  to 
the  phrase  among  foreigners,  and  is  the  meaning  which  the  best  prac- 
tice among  exporters  requires  it  invariably  to  have.  But  because  of 
the  confusion  which  has  arisen  through  the  use  of  that  form  with  a 
different  meaning  by  inland  producers  and  distributors,  and  in  the 
interest  of  unmistakable  clarity,  the  Conference  most  strongly  urges 
the  invariable  use  by  American  manufacturers  and  exporters  of  the 
form  "F.  O  B.  Vessel  (named  port)."  This  adds  only  one  word  to  the 
abbreviated  form  and  has  the  great  advantage  that  it  cannot  be  mis- 
understood. It  also  avoids  the  difficulty  which  might  arise  among 
foreigners  not  always  well  versed  in  American  geography,  through 
confusing  an  inland  forwarding  point  with  a  shipping  port  at  seaboard. 

The  Conference  calls  attention  to  the  fact  that  in  selling  "F.  A.  S. 

327 


COMMERCIAL   ARBITRATION 

Vessel"  manufacturers  and  exporters  should  be  careful  to  have  their 
agreements  with  buyers  cover  explicitly  the  question  of  responsibility 
for  loss  after  goods  have  been  delivered  on  the  wharf  or  alongside  the 
vessel  and  before  they  are  actually  loaded  on  the  ship,  There  is  no 
generally  established  practice  on  this  point.  The  recommendation 
of  the  Conference  in  the  definitions  of  responsibility  under  section 
7,  sets  up  a  rule  which  it  is  hoped  will  lead  to  the  establishment  of  a 
standard  practice. 

It  is  understood  that  the  provision  of  lighterage  covered  in  several 
of  these  recommendations  is  only  within  the  usual  free  lighterage 
limits  of  the  port,  and  that  where  lighterage  outside  such  limits  is 
required,  it  is  for  buyer's  account. 

In  order  to  avoid  confusion  in  another  particular,  attention  is 
called  to  the  care  which  must  be  exercised  in  all  cases  in  making  weight 
quotations.  The  net  ton,  the  gross  ton  and  the  metric  ton,  all  differ 
in  weight.  Similarly  there  is  a  variation  in  the  use  of  the  term  " hundred- 
weight" to  mean  either  100  pounds  or  112  pounds.  It  is,  therefore, 
not  sufficient  to  quote  a  price  per  "ton"  or  per  "hundred  weight."  In- 
stead the  Conference  recommends  the  use  of  the  terms  "ton  of  2,000  lbs," 
"ton  of  2,240  lbs.",  or  "ton  of  2,204  lbs.",  etc.,  whichever  is  intended. 

It  is  also  important  to  note  that  a  carload  lot  in  the  United  States 
means  the  quantity  of  the  particular  commodity  in  question  necessary 
to  obtain  the  carload  freight  rate  for  transportation  on  American 
railways.  This  quantity  varies  according  to  the  commodity  and  also 
varies  in  different  parts  of  the  country.  Certain  commodities  being 
more  bulky  than  others,  the  minimum  carload  for  them  is  less  than  for 
heavier  products  occupying  less  space.  The  load  required  may  range 
anywhere  from  12,000  to  90,000  pounds.  Consequent^  •  it  is  important, 
When  quoting  prices  applicable  to  carload  lots,  to  so  state  and  to  specify 
the  minimum  weight  necessary  to  make  a  carload  lot  of  the  particular 
commodity  for  the  particular  shipment  in  question. 

The  Conference  points  out  that  in  quoting  "C.  &  F."  or  "C.  I.  F.", 
manufacturers  and  exporters  moving  large  quantities  of  material  by 
one  vessel  should  be  careful  to  ascertain  in  advance  the  buyer's  ca- 
pacity to  take  delivery.  This  because,  under  these  terms  and  as  a  con- 
dition of  making  the  freight  rate,  transportation  companies  may 
require  a  certain  rate  of  discharge  per  day,  and  that  rate  of  discharge 
might  be  in  excess  of  the  buyer's  capacity  to  take  delivery.  In  such 
event  an  adjustment  with  the  transportation  company  would  be 
necessary,  which  might  affect  the  freight  rate  and  consequently  the 
price  to  be  quoted. 

328 


APPENDIX 

The  Conference  also  strongly  urges  shippers  clearly  to  understand 
the  provisions  of  their  insurance  protection  on  all  foreign  sales,  irre- 
spective of  the  general  terms  used  thereon.  In  almost  all  cases  it  should 
be  possible,  when  making  shipments  by  steamer,  to  obtain  insurance 
cover  giving  full  protection  from  primary  shipping  point  to  designated 
sea  port  delivery,  and/or  foreign  port  delivery.  As  ordinary  marine 
insurance  under  F.  P.  A.  conditions,  i.  e.  free  of  particular  average, 
gives  no  protection  against  deterioration  and/or  damage  to  the  mer- 
chandise itself  while  in  transit,  when  caused  by  the  recognized  hazards 
attending  such  risks,  shippers  should  endeavor  in  all  cases  to  obtain 
insurance  under  W.  P.  A.  (S.  P.  A.)  conditions,  i.  e.  with  particular 
average  (subject  to  particular  average),  when  in  excess  of  the  cus- 
tomary franchise  of  3  per  cent  to  5  per  cent.  Under  such  form  of  insur- 
ance, underwriters  will  be  called  upon  to  pay  claims  for  damages  when 
these  exceed  the  stipulated  franchise. 

The  Conference  points  out  that  inasmuch  as  fees  for  consular 
invoices  and  similar  items  are  arbitrary  charges  fixed  by  foreign  govern- 
ments, they  are  not  included  in  the  terms  of  C.  &  F.  or  C.  I.  F.  quota- 
tions, and  it  is  part  of  the  duty  of  the  buyer  to  meet  them. 

Finally,  the  Conference  strongly  recommends,  as  a  most  effective 
measure  of  simplification,  the  general  practice  of  quoting  for  export,  as 
far  as  possible,  either  "F.  A.  S.  Vessel,"  "F.  O.  B.  Vessel"  or  "C.  I.  F." 
Concentration  on  this  small  list,  all  of  which  terms  are  readily  under- 
stood abroad  and  are  difficult  of  misinterpretation,  will,  it  is  felt,  be 
markedly  influential  in  avoiding  confusion  and  controversy. 

The  conclusions  and  definitions  set  forth  above  are  the  recommenda- 
tions of  a  Conference  which  was  composed  of  representatives  of  nine 
of  the  great  commercial  organizations  of  the  United  States  interested 
in  foreign  trade.  Not  all  have  as  yet  the  force  of  law  or  long  established 
practice;  but  it  is  the  hope  and  expectation  of  the  Conference  that 
these  recommendations  will  receive  such  adherence  on  the  part  of 
American  producers  and  distributors,  as  to  make  them  in  fact  the 
standard  American  practice.  And  it  is  therefore,  expected  that  in  due 
time  they  will  receive  the  sanction  of  legal  authority. 


329 


INDEX 


A 
ABOUT                                                                                                                        Page 
"Five  per  cent  more  or  less"  clause  in  contract  fixing  number  tons  at.  . .  .255 
Number  tons  not  specific  quantity 255 

ACCEPTANCE 

Buyer's  inspection  and 37 

ACCIDENT 

Calms,   heavy  weather,  swells,  etc.,  not  within  the  meaning  of  copra 
contract  casualty  clause 211 

ACIDITY 

Foreign  certificate  of,  controls  C.  I.  F.  contract 64 

Of  coconut  oil  guaranteed  on  arrival 63 

ADMINISTRATOR  (OR  EXECUTOR) 

Cannot  bind  estate  by  submission 6 

May  make  submission 6 

AGENCY 

Damages  for  breach  of 32 

Responsibility  of  seller  when  he  becomes  buyer's  agent  in  delivering  goods 
to  third  party 31 

AGENT 

Acting  for  shipper  in  stowage  of  tar 227 

Arbitrator  is 11 

Must  have  specific  authority  to  make  submission 5 

Seller,  in  certain  circumstances,  may  become  buyer's 42 

Tender  must  be  to  designated 250 

When  bound  by  arbitration 5 

AGREEMENT 

To  submit  to  arbitration  not  enforceable 8 

Validity  of,  under  New  York  arbitration  code 8 

ALMONDS 94 

APPEAL 

In  arbitration  before  California  Bean  Dealers  Association 306 

In  arbitration  before  Chicago  Board  of  Trade 280 

In  arbitration  before  Foreign  Commerce  Association  of  the  Pacific  Coast .  275 

In  arbitration  before  Interstate  Cottonseed  Crushers  Association 290 

In  arbitration  before  New  Orleans  Board  of  Trade  Limited 283 

In  arbitration  before  Rice  Association  of  California 304 

In  arbitration  before  San  Francisco  Chamber  of  Commerce 286 

APPENDIX 309 

APPOINTMENT 

Of  arbitrator 11 

APRICOT  KERNELS 191 

ARBITRATION 2  to  28 

Defined 3 

Act  of  the  New  York  State  legislature 316 

And  the  courts 3 

Appeal  permitted  by  California  Bean  Dealers  Association 306 

Appeal  permitted  by  Chicago  Board  of  Trade 280 

Appeal  permitted  by  Foreign  Commerce  Association  of  the  Pacific  Coast.  .275 


ii  INDEX 

ARBITRATION— Continued  Page 

Appeal  permitted  by  Interstate  Cottonseed  Crushers  Association 290 

Appeal  permitted  by  New  Orleans  Board  of  Trade,  Limited 283 

Appeal  permitted  by  Rice  Association  of  California 304 

Appeal  permitted  by  San  Francisco  Chamber  of  Commerce 286 

Award 17 

Award  in  alternative 18 

Buyer  entitled  to  damages  when  seller  diverts  and  resells  goods  without 

resorting  to 95 

Commercial  recognition  of 4 

Common  law  and  statutory 3 

Distinguished  from  reference 4 

Fees  of,  California  Bean  Dealers  Association 305 

Fees  of,  Chamber  of  Commerce  of  State  of  New  York 271 

Fees  of,  Chicago  Board  of  Trade 281 

Fees  of,  Dried  Fruit  Association  of  California 301 

Fees  of,  Dried  Fruit  Association  of  Chicago 301 

Fees  of,  Dried  Fruit  Association  of  New  York 301 

Fees  of,  Dried  Fruit  Association  of  St.  Louis - 301 

Fees  of,  Foreign  Commerce  Association  of  the  Pacific  Coast 274 

Fees  of,  Interstate  Cottonseed  Crushers  Association 297 

Fees  of,  National  Canned  Foods  and  Dried  Fruit  Brokers  Association 301 

Fees  of,  National  Canners  Association 301 

Fees  of,  New  Orleans  Board  of  Trade,  Limited 283-284 

Fees  of,  Rice  Association  of  California 303 

Fees  of,  San  Francisco  Chamber  of  Commerce 286 

Fees  of,  Wholesale  Grocers  Association 301 

Forms  of  submission  to 309 

Methods  of  various  commercial  bodies 267 

Notice  of  time  and  place  of  hearing  of 14 

Procedure  in 14 

Reports  of  commercial 29 

Rules  of,  Chamber  of  Commerce  of  State  of  New  York 268 

Rules  of,  Chicago  Board  of  Trade. 278 

Rules  of.  Foreign  Commerce  Association  of  the  Pacific  Coast 274 

Rules  of,  New  Orleans  Board  of  Trade,  Limited 283 

Rules  of,  San  Francisco  Chamber  of  Commerce 286 

Sample  for,  drawn  by  buyer  in  good  faith  valid 175 

Statutory 25 

What  may  be  submitted  to 4 

ARBITRATOR  (s) 

Defined 10 

Acting  under  Association  rules,  penalize  party  for  sharp  practice 163 

An  agent  of  the  parties 11 

Appointment  of 11 

Business  relations  of,  and  party 13 

Buyer  has  right  of  settlement  by 95 

Cannot  receive  ex  parte  evidence 16 

Cannot  vary  terms  of  submission 27 

Certificate  by  private  inspector  not  final  with 174 

Collusion  on  part  of 21 

Fraud  on  part  of 21 

Gross  error  on  part  of 22 

May  adjourn  hearing 16 

May  determine  sufficiency  of  sample 173 

May  receive  expert  evidence 16 

Misconduct  on  part  of 21 

Must  be  disinterested  and  impartial 12 

Must  be  present  at  hearings 15-26 

Must  be  sworn 26 

Must  hear  the  evidence 15 

Need  not  follow  strict  rules  of  law 18 


INDEX  iii 

ARBITRATOR  (s)— Continued  Page 

Oath  of > 13 

Powers  of 17 

Qualification  of 11 

Relationship  of,  to  a  party 12 

Substitution  of 13 

Will  consider  quality  when  parties  waive  finality  of  certificate 42 

Will  interpret  contract  provisions  when  parties  disagree  as  to  whether 

contract  was  C.  I.  F.  or  ex  dock 73 

Will  resort  to  contract  where  evidence  as  to  declaration  of  vessel  conflicts.  .  99 

ASSIGNEES 

In  bankruptcy  may  make  submission 6 

AWARD 17 

Defined . 17 

Arbitrators  must  publish 19 

Basis  of  action  or  defense  thereto 19 

Causes  for  vacating 27 

Collusion  in  obtaining 21 

Court  may  modify  or  correct 28 

Enforcement  of 19 

Entry  of,  as  judgment  of  court 27 

Fraud  surrounding 21 

Gross  error  in 22 

Grounds  for  avoiding 20 

In  alternative 18 

Mere  clerical  error  or  mistake  will  not  invalidate 22 

Misconduct  on  part  of  arbitrator  will  avoid 21 

Mistake  in  description  of  some  person  or  property  vital  to  issue  will  avoid.  .   22 

Must  be  conclusive. 18 

Must  be  certain 18 

Need  not  follow  strict  rules  of  law 18 

Reversed  for  concealment  of  facts  by  party 163 

Rescinded  by  arbitrators  when  buyer  rejects  goods 162 

Responsibility  for,  of  London  Arbitrators 124 

Subject  to  review  of  court 19 

Uncertain 22 

When  impossible  of  performance 23 

B 
BARBED  WIRE 117 

BARLEY 230-231 

BE  ANS. ..  33-42-44-45-75-260-82-83-103-106-1 14-131-139-163-169-171-175-191-198-250- 

252-260-262-263 
BILL  OF  LADING 

Date  of,  conclusive  evidence  of  shipment 189 

Date  of,  final  as  to  date  of  shipment 183 

Date  of,  governs  as  to  time  of  shipment 74 

Date  governs  in  absence  of  fraud 193 

Delay  of  captain  in  signing 220 

Evidence  of  shipment 193 

Shipment  of  grain  governed  by  clean 220 

Subject  to  mate's  receipt 205 

Wrongful  dating  of 195 

BROKER 

Failure  of,  to  transmit  conditions  of  sale  will  not  excuse  principal 33 

Not  responsible  for  principal's  failure  to  answer  prompt 34 

Notice  to  seller's,  insufficient 91 

Notice  to  seller's,  not  notice  to  buyer 33 


iv  INDEX 

BUYER  (s)  Pago 

Allowance  refused  by,  set  aside 162 

Buyer  not  injured  where  seller  guarantees  him  against  extra  expense 129 

Cannot  cancel  contract  without  having  demanded  tender 252 

Consenting  to  late  shipment,  cannot  thereafter  reject  for  such  cause 215 

Claim  paid  by,  to  subsequent  purchaser  not  valid  against  seller 75 

Damages  of,  reduced  by  laches 166 

Disapproval  of  sample  by 167 

Entitled  to  damages  when  seller's  supplier  fails  to  deliver 94 

Entitled   to    damages   when   seller    diverts    and   resells   goods   without 

arbitration 95 

Entitled  to  all  copra  loaded  in  vessel  under  full  cargo  sale 125 

Entitled  to  weights  at  destination  in  absence  of  true  shipping  weights ....  263 

Extra  war  risk  for  account  of 65 

Failure  to  give  shipping  instructions  does  not  permit  seller  to  abrogate 

agreement 131 

Failure  to  have  tank  cars  ready  for  vegetable  oil 237 

Has  right  of  diversion 113 

Has  right  of  rejection,  when 39 

Has  right  of  settlement  by  arbitration 95 

Inability  of,  to  obtain  specifications  for  lumber  no  excuse  for  non-per- 
formance of  contract 133 

Inability  to  secure  vessel  for  cargo  does  not  excuse 133 

In  good  faith,  drawing  samples  for  arbitration,  not  estopped  from  main- 
taining claim 175 

Inspection  and  acceptance 37 

Must  notify  seller  before  purchasing  for  his  account. 199-202 

Must  take  delivery  of  all  goods  under  special  "damage"  clause 77 

Not  damaged  by  non-delivery  where  market  declines 88 

Not  injured  by  seller  paying  duty  under  C.  I.  F.  contract 65 

Not  entitled  to  reject  when  he  could  be  made  whole  by  allowance 156 

Not  responsible  for  refrigeration  charges  on  coconut  oil  sold  F.  O.  B.  New 

York 147 

Not  entitled  to  new  tender 162 

Not  justified  in  reselling  steel  bars  without  notice 233 

Not  required  to  pay  interest  on  deferred  delivery  of  barley 231 

Obligation  of,  under  C.  I.  F.  contract 55 

Obligation  of,  under  C.  &  F.  contract 55 

Of  beans  is  entitled  to  minimum  carload  to  secure  lowest  freight  rate 139 

Responsibility  of,  for  deterioration  of  coconut  oil  in  transit 63 

Responsibility  of,  for  extra  freight  on  changed  routing  under  C.  I.  F.  con- 
tract   65 

Responsible  for  wharfage  under  C.  I.  F.  contract  duty  paid 70 

Refusing  to  give  instructions  and  defaulting  in  payment,  penalized  for 

difference  in  market  value 81 

Responsibility  of,  under  C.  I.  F.  contract 205 

Seller  not  responsible  for  laches  of 187 

When  delivery  is  delayed  by  request  of 103 

C 

CALIFORNIA  BEAN  DEALERS  ASSOCIATION 304 

Appeal  in  arbitration 306 

Fees  of 305 

Rules  of 305 

CANCELLATION 

Of  contract  not  justifiable,  through  delay  in  tender  of  weight  certificate 

and  warehouse  receipt 262 

Of  portion  does  not  extend  to  entire  quantity 215 

Of  vessel's  sailing  not  force  majeure  under  contract  providing  January- 
February  shipment 214 


INDEX  v 

CASUALTY                                                                                                                Page 
Clause  of  copra  contract  . .  r 211 

CERTIFICATE 

Alteration  of,  not  countenanced  by  arbitrators 52 

By  private  inspector  not  final  with  arbitrators 174 

Date  of  surveyor's,  evidencing  time  of  shipment 216 

Of  analysis  at  foreign  port  controls  C.  I.  F.  contract 64 

Of  Chamber  of  Commerce  cannot  be  substituted 52 

Of  Chamber  of  Commerce,  when  final 50 

Of  inspection  at  interior  point  not  valid  for  beans  sold  for  water  shipment. .  45 

Of  inspection  at  time  of  shipment  final 47 

Of  inspection  must  be  made  at  point  of  shipment 45 

Of  quality 41 

Of  quality  at  foreign  port  governs  C.  I.  F.  contract 70 

Of  quality  not  final  when  parties  waive  finality 42 

Where  final,  mere  statement  that  goods  were  not  segregated  will  not 
suffice 50 

CHAMBER  OF  COMMERCE 

Of  State  of  New  York 268 

CHARTER  PARTY 

Should  be  specific  as  to  excess  quantity  of  laths  in  lumber  cargo 223 

Should  specifically  cover  Port  Costa 223 

Specifying  discharge  at  San  Francisco  does  not  permit  discharge  at  Oakland 
without  paying  costs 222 

CHICAGO  BOARD  OF  TRADE 278 

Appeal  in  arbitration 280 

Fees  of 281 

Rules  of  arbitration  of 278 

C.  I.  F. 

Defined 55-325 

Any  shipping  route  may  be  taken  under 99 

Arbitrators  will  interpret  contract  provisions  when  parties  disagree  as  to 

whether  contract  was  Ex  Dock  or 73 

Contract  cannot  be  both  Ex  Dock  and 58 

Contract  controlled  by  foreign  certificate  of  analysis 64 

Contract  controlled  by  foreign  certificate  of  quality 70 

Contract  qualified  by  acidity  and  inspection  clauses 63 

Damage  to  cargo  is  for  buyer's  account  on  sale 58 

Delay  in  documents  covering  sale  made 129 

Payment  of  duty  by  seller  does  not  breach  contract 65 

Responsibility  for  extra  freight  on  changed  routing  under 65 

Responsibility  of  buyer  under 205 

Risk  of  goods  after  shipment  for  buyer's  account 59 

Seller  not  responsible  for  wharfage  where  contract  specifies  duty  paid 70 

Trans-shipment  permitted  under,  contract 65 

Trans-shipment  under,  contract 182 

When  contract  is  qualified  seller  not   responsible  for  contamination  of 

coconut  oil 59 

Where  seller  guarantees  buyer  against  expense  incurred  by  delay  of  docu- 
ments covering 129 

C.  &F. 

Defined 55-325 

CLAIM 

And  demand  for  short  carrying  of  cargo  must  be  made  at  port  of  shipment .  224 
Of  buyer  who  draws  sample  for  arbitration  in  good  faith,  may  be  main- 

t  ained 175 

Paid  by  buyer  to  subsequent  purchaser  not  valid  against  seller 75 


vi  INDEX 

Page 
COAL 213 

COCONUT  OIL 59-63-121-147 

COCONUTS 87-205 

COFFEE 98-124-181-214 

COLLUSION 

Of  arbitrators  and  party  will  avoid  award 21 

COLOR 

Reading  of  F.  A.  Q.  Manila  Grade  coconut  oil 121 

COMMERCIAL  BODIES 

Methods  of  arbitration  of  various 267 

COMMON  LAW  ARBITRATION 3 

CONDITION  PRECEDENT 

When  arbitration  is 8 

CONTAINER 

Described  in  contract  must  be  supplied 100 

CONTINGENCY 

Adverse  wins  not,  beyond  seller's  control 195 

Beyond  seller's  control  does  not  mean  shutting  out  of,  cargo  by  carrier  or 

default  of  seller's  supplier 85 

Presence  of  ice  preventing  movement  of  lumber  barge  beyond  shipper's 

control 109 

CONTRACT 

Abrogation   of,  where  one  party  misunderstood  meaning  of  term  "duty 

paid" 145 

All    correspondence    will    be    considered    by    arbitrators    to    determine 

meaning  of 142 

Arbitrators  will  interpret  provisions  of,  when  parties  disagree  as  to  whether 

terms  were  C.  I.  F.  or  Ex  Dock 73 

Buyer  cannot  cancel,  without  having  demanded  tender 252 

Cancellation  of,  not  allowed 117 

Cannot  be  both  C.  I.  F.  and  Ex  Dock 58 

Casualty  clause  of  copra 211 

Container  described  in,  must  be  supplied 100 

Damages  for  failure  to  lift  cargo  under 134 

Day's  time  in  shipment  an  important  variation  in 191 

Delay  in  tender  of  weight  certificate  and  warehouse  receipt  not  justification 

for  cancellation  of .  262 

Effect  of  act  of  Government  on 117 

Effect  of  war  on 117 

Failure  of  ocean  transportation  does  not  cancel 91 

Foreign  certificate  of  analysis  controls  C.  I.  F :    64 

Inability  of  buyer  to  obtain  specifications  for  lumber  no  excuse  for  non- 
performance of 133 

Inability  to  secure  vessel  for  cargo  does  not  excuse  buyer  for  non-per- 
formance of 133 

Indefinite  and  uncertain 136 

Limitation  as  to  export  license  and  priority  permit 117 

Limitation  in,  as  to  second  tender 250 

May  not  be  altered  except  by  mutual  consent 258 

Meaning  of  "random"  lengths  in  lumber 136 

Mistake  of  parties  will  render,  void 141 

Provision  "duty  paid"  interpreted 145 


INDEX  vii 

CONTRACT— Continued  Page 

Refrigeration  charges  on  coconut  oil  under  F.  O.  B.  New  York 147 

Sample  sent  by  seller  is  part  of 168 

Seller's   obligation   to   make    delivery   under,    not   containing   so-called 

"rejection  constitutes  delivery"  clause 245 

Seller  responsible  for  uneven  weights  under  F.  O.  B.  cars 260 

Specifying  August-September  shipment  not  fulfilled  by  Oct.  1st  shipment. .  191 
Tender  of  deliverv  order  and  warehouse  receipts  does  not  complv  with 

F.  O.  B.  cars...* 254 

Time  of,  an  essential  element  of 178 

Trans-shipment  under  C.  I.  F 182 

Typewritten  stipulations  in,  abrogate  printed  clauses 58 

Uncertain  when  specifying  "usual  packing"  of  peanuts 264 

When  silent  on  routing,  direct  or  indirect  shipment  permitted 182 

Where  evidence  as  to  declaration  of  vessel  conflicts  arbitrators  will  resort  to  99 

Where  impossible  of  performance 136 

Withdrawal  of  regular  vessels  from  route  does  not  justify  trans-shipment 

under  direct  shipment 181 

COPRA 73-85-91-125-142-173-195-211-212-224-229-255-258 

COPRA  CAKE 171 

Percentage  of  fat  in  Manila  hydraulic 171 

CORPORATION 

May  make  submission 6 

CRATING 

Of  lumber  for  export 135 

D 

DAMAGE  (s) 

Allowed  for  late  shipment 202 

Buyer  entitled  to,  for  seller's  resale  of  goods  without  arbitration 95 

Buyer  entitled  to,  when  seller  diverts  and  resells  goods  before  arbitration.  .  95 

Buyer  entitled  to,  when  seller's  supplier  fails  to  deliver 94 

Fixed  as  of  date  of  default 83 

Fixed  for  non-delivery  of  copra 85 

For  breach  of  agency 32 

For  buyer  reduced  for  laches 166 

For  failure  to  lift  cargo  under  contract 134 

For  improper  packing 135 

For  non-acceptance 81 

For  non-compliance  with  shipping  instructions 230 

For  non-delivery 81 

For  non-performance  of  lumber  contract 133 

For  short  shipment  of  rice  sold  as  "now  rolling" 86 

Interest  not  allowed  on 85 

Not  allowed  buyer  who  purchased  for  seller's  account  without  notice.  . .  .199 

Special  clause  covering 77 

To  vessel  by  tug  having  her  in  tow 224 

DECLARATION 

Force  majeure  does  not  excuse  seller  when  he  fails  to  make 98 

Of  vessel 97-98 

Seller  not  obligated  to  make 100 

Where  evidence  conflicts  as  to,  arbitrators  will  resort  to  contract 99 

DEFINITIONS 

American  foreign  trade 320 

Arbitration 3 

Arbitrator 10 


viii  INDEX 

DEFINATIONS— Continued  Page 

Award 17 

C.  I.  F 55-325 

C.  &  F 55-325 

F.  A.  Q 121 

F.  A.  S 326 

F.  O.  B •  : 321 

"Free  berth" 226 

L.  C.  L. 326 

Submission 5 

DELAY 

In  tender  of  weight  certificate  and  warehouse  receipt  not  justification  for 

cancellation  of  contract 262 

Of  captain  in  signing  bills  of  lading 220 

DELIVERY 

Effect  of  force  majeure  on 105-106 

Must  conform  to  sample 1 65 

On  March  1st  does  not  fulfill  January-February  shipment 254 

Order  and  warehouse  receipts  does  not  comply  with  F.  O.  B.  cars  contract.  .254 

Seventeen  days  delay  held  to  be  unreasonable  in  time  of 191 

Time  of 103 

When  delayed  at  buyer's  request 103 

DEMURRAGE 109 

For  non-completion  of  vessel  in  contract  time 110 

Inability  to  obtain  use  of  crane  does  not  absolve  shipper  from  paying 220 

On  vessel  not  allowed  when  loading  is  delayed  by  presence  of  ice 109 

Shipper  responsible  for,  on  vessel 220 

Shortage  in  rail  equipment  does  not  relieve  charterer  for  vessels 222 

Sundays,  rainy  days  and  legal  holidays  not  lay  days  involving 221 

DEPOSIT 

Of  fees  required  by  California  Bean  Dealers  Association 305 

Of  fees  required  by  Chamber  of  Commerce  of  State  of  New  York 271 

Of  fees  required  by  Dried  Fruit  Association  of  California 301 

Of  fees  required  by  Dried  Fruit  Association  of  Chicago 301 

Of  fees  required  by  Dried  Fruit  Association  of  New  York 301 

Of  fees  required  by  Dried  Fruit  Association  of  St.  Louis 301 

Of  fees  required  by  Foreign  Commerce  Association  of  the  Pacific  Coast.  .274 

Of  fees  required  by  Interstate  Cottonseed  Crushers  Association 297 

Of  fees  required  by  National  Canners  Association 301 

Of  fees  required  by  National  Wholesale  Grocers'  Association 301 

Of  fees  required  by  New  Orleans  Board  of  Trade  Limited 283-284 

Of  fees  required  by  Rice  Association  of  California 303 

Of  fees  required  by  San  Francisco  Chamber  of  Commerce 286 

DETERIORATION 

Of  beans  in  transit 45 

Of  coconut  oil  in  transit 59-63 

Of  prunes  in  transit 47 

DIRECT  SHIPMENT 177 

Or  indirect  shipment  permitted  when  contract  is  silent  on  routing 182 

Withdrawal  of  regular  vessels  from  route  does  not  justify  trans-shipment 
under  contract  specifying 181 

DIVERSION 113 

Buyer  entitled  to  damages  because  of  unauthorized 95 

Requested  too  late  to  be  affected  need  not  be  made  by  seller 52 

Seller  not  responsible  for  failure  of  carrier  to  effect 114 

When  buyer  has  right  of 113 


INDEX  ix 

DOCK                                                                                                                      Page 
Rental  chargeable  to  vessel  at  San  Francisco 225 

DRIED  FRUIT 39-170-186-187-188-189-191-257 

Dried  Fruit  Association  of  California 299 

Fees  of 301 

Rules  of 300 

Dried  Fruit  Association  of  Chicago 299 

Fees  of 301 

Rules  of 300 

Dried  Fruit  Association  of  New  York 299 

Fees  of 301 

Rules  of 300 

Dried  Fruit  Association  of  St.  Louis 299 

DUTY 

Meaning  of  term  "duty  paid"  in  event  of  increase  in 145 

Where  one  party  musunderstood  meaning  of 145 

E 

ENFORCEMENT 

Of  award 19 

ERROR 

In  award  must  be  gross  to  avoid  award 22 

ESTIMATE 

Of  vessels  tonnage  does  not  control  full  cargo  sale 125 

EVIDENCE 

Arbitrator  bound  to  receive 15 

Arbitrators  may  receive  expert 16 

Duty  of  providing 16 

Of  witnesses  must  be  given  in  presence  of  parties 16 

EX  DOCK 

Arbitrators  will  interpret  provision  of  contract  when  parties  disagree  as  to 

whether  contract  was  C.  I.  F.  or 73 

Contract  cannot  be  both  C.  I.  F.  and 58 

Differentiation  between  terms  "ships  tackles"  and 221 

Duty  paid  contract  not  fulfilled  by  tender  of  sampling  permit  on  bonded 

warehouse 243 

EXECUTOR  (OR  ADMINISTRATOR) 

May  make  submission 6 

F 

F.  A.  Q. 

Defined 121 

Color  reading  of,  Manila  grade  coconut  oil 121 

Java  peanuts 77 

Manila  grade  coconut  oil  embraces  better  and  poorer  deliveries 121 

F.  A.  S. 

Defined 326 

FEES 

Of  arbitration  of  California  Bean  Dealers  Association 305 

Of  arbitration  of  Chamber  of  Commerce  of  State  of  New  York 271 

Of  arbitration  of  Chicago  Board  of  Trade 281 

Of  arbitration  of  Dried  Fruit  Association  of  California 301 

Of  arbitration  of  Dried  Fruit  Association  of  Chicago 301 

Of  arbitration  of  Dried  Fruit  Association  of  New  York 301 


x  INDEX 

FEES— Continued  Page 

Of  arbitration  of  Dried  Fruit  Association  of  St.  Louis 301 

Of  arbitration  of  Foreign  Commerce  Association  of  the  Pacific  Coast.  . .  .274 

Of  arbitration  of  the  Interstate  Cottonseed  Crushers  Association 297 

Of  arbitration  of  National  Canned  Foods  and  Dried  Fruits  Brokers  Associa- 
tion  301 

Of  arbitration  of  National  Canners  Association 301 

Of  arbitration  of  National  Wholesale  Grocers  Association 301 

Of  arbitration  of  New  Orleans  Board  of  Trade,  Limited 283-284 

Of  arbitration  of  Rice  Association  of  California 303 

Of  arbitration  of  San  Francisco  Chamber  of  Commerce 286 

FLOODS 

Interfering  with  delivery  excuse  delay 88 

FLOUR 226 

F.  O.  B. 

Definition  of,  in  export  trade 321 

Dock  named  port  weights  govern  at  point  of  shipment 127 

Foreign  port 124 

Named  plant 31 

Seller  responsible  for  uneven  weights  under,  cars  contract 260 

Tender  of  delivery  order  and  warehouse  receipts  does  not  comply  with, 
cars  contract ....  254 

FORCE  MAJEURE 181-193-205-214 

FOREIGN  COMMERCE  ASSOCIATION  OF  THE  PACIFIC  COAST 272 

Appeal  in  arbitration 275 

Rules  of  arbitration  of 272 

FORM 

Of  submission  to  California  Bean  Dealers  Association 315 

Of  submission  to  the  Chamber  of  Commerce  of  the  State  of  New  York 309 

Of  submission  to  Chicago  Board  of  Trade 315 

Of  submission  to  Dried  Fruit  Association  of  California 301 

Of  submission  to  Dried  Fruit  Association  of  Chicago 301 

Of  submission  to  Dried  Fruit  Association  of  New  York 301 

Of  submission  to  Dried  Fruit  Association  of  St.  Louis 301 

Of  submission  to  Foreign  Commerce  Association  of  Pacific  Coast 314 

Of  submission  to  the  Interstate  Cottonseed  Crushers  Association 291 

Of  submission  to  National  Canned  Foods  and  Dried  Fruits  Brokers  Associa- 
tion  301 

Of  submission  to  National  Canners  Association 301 

Of  submission  to  National  Wholesale  Grocers  Association 301 

Of  submission  to  New  Orleans  Board  of  Trade,  Ltd 315 

Of  submission  to  New  York  Produce  Exchange 311 

FORMS 

Of  submission  to  arbitration — See  appendix 309 

"FREE  BERTH" 

Defined 226 

FULL  CARGO 

Is  not  a  limitation  of  quantity .• 125 

Sales  entitles  buyer  to  all  copra  loaded  in  vessel 125 . 

Term  defined 255 

FUTURE  SALES . 94 

When  subject  to  "opening  price" 94 

When  price  is  guaranteed  against  opening  price 126 


INDEX  xi 

G 
( i  I :  X 1 :  R  AL  SUBMISSION                                                                                       Page 
What  constitutes 6 

GRAIN 94-220 

Rule  governing  prompt  or  future  shipments  of 94 

GRAIN  BAGS 199-202 

GUARDIAN 

Has  general  authority  to  make  submission 6 

H 
HEARING 

Arbitrators  may  adjourn 16 

Arbitrators  must  give  notice  of  time  and  place  of 14 

When  notice  of,  not  necessary 15 

HOLIDAYS 

Affecting  time  of  shipment 198 

Sundays,  rainy  days  and,  not  counted  as  lay  days  for  demurrage  on  vessel.  .221 

I 
IMMEDIATE  SHIPMENT 33-302 

INDIRECT  SHIPMENT 177 

Or  direct  shipment  permitted  when  contract  is  silent  on  routing 182 

INFANT 

Guardian  may  submit  for 6 

Not  bound  by  submission 5 

INSPECTION 

By  buyer  and  acceptance 37 

By  buyer  at  point  of  shipment 39 

Of  beans  at  interior  point  not  valid  when  sold  for  water  shipment 45 

Of  goods  sold  F.  O.  B.  dock  San  Francisco  must  be  made  before  export 
shipment 127 

INSTRUCTIONS 

Failure  to  give,  does  not  permit  seller  to  abrogate  agreement 131 

Seller  liable  for  shipping  without 83 

Shipment  not  controlled  by  shipping 215 

Shipping,  when  part  of  confirmation,  control  shipment  of  barley 230 

INSURANCE 129 

Extra  war  risk  for  account  of  buyer 65 

Payment  of  extra  cost  of,  of  deck  load  of  lumber 129 

Typewritten  clause  in  policy  controls  printed  clause 129 

Usual  marine  under  C.  I.  F*  contract 55 

War  risk  under  delivered  contract 130 

Where  mill  cost  governs 129 

INTEREST 

Failure  to  compute  will  not  avoid  award  for  uncertainty 23 

Not  allowed  on  damages 85 

INTERSTATE  COTTON  SEED  CRUSHERS  ASSOCIATION,  THE 290 

Appeal  in  arbitration 290 

Fees  of 297 

Form  of  agreement  for  arbitration  by 291 

Rules  of  arbitration  of 293 


xii  INDEX 

J                                                                Page 
JOINT  ACCOUNT  PURCHASE  AND  SALE 131 

JURISDICTION 20 

Restricted  to  issues  of  submission 6 

Submission  creates  special 7 

Want  of,  in  arbitrators 20 

L 
LATHS 223 

LAY  DAYS 

Commencement  of  lay  days 222 

Sundays,  rainy  days  and  holidays  not  counted  as 221 

L.  C.  L. 

Defined 326 

LIMITED  SUBMISSION 

What  constitutes 6 

LUMBER 109-129-133-134-135-136-221-223 

Meaning  of  term  random  lengths  of 136 

M 

MACAROON 71 

METHODS 

Of  arbitration  of  various  commercial  bodies 267 

MINIMUM  CARLOAD 139 

Buyer  of  beans  is  entitled  to,  to  secure  lowest  freight  rate 139 

Rules  governing 139 

MISBRANDING 

Of  goods  sold  on  sample 170 

MISCONDUCT 

Of  arbitrators  will  avoid  award 21 

MISREPRESENTATION 

Extension  of  time  under,  does  not  excuse  seller  for  late  shipment 199 

MISTAKE 141 

In  description  of  some  person  or  property  vital  to  issue  will  avoid  award. .  22 

In  tender  may  be  corrected 247 

Mere  clerical  error  or  mistake  will  not  invalidate  award  .*. 22 

Of  carrier  in  failing  to  effect  diversion  not  chargeable  to  seller 114 

Of  parties  will  render  contract  void 141 

MUSTARD  SEED 168 

N 

NATIONAL  CANNERS  ASSOCIATION 299 

Fees  of 301 

Rules  of 300 

NATIONAL  CANNED  FOOD  AND  DRIED  FRUITS  BROKERS  ASSOCIA- 
TION  ; 299 

Fees  of 301 

Rules  of 300 


INDEX  xiii 

Page 
NATIONAL  WHOLESALE  GROCERS  ASSOCIATION 299 

Fees  of 301 

Rules  of 300 

NEW  ORLEANS  BOARD  OF  TRADE,  LIMITED 282 

Appeal  in  arbitration 283 

Fees  of 283-284 

Rules  of  arbitration  of 283 

NEW  YORK 

Arbitration  law  of 316 

NEW  YORK  PRODUCE  EXCHANGE 276 

NITRATE  OF  SODA 229 

NOTICE 

Must  be  given  by  buyer  before  purchasing  for  sellers  account 199-202 

Of  arrival  customary  but  failure  to  give  is  not  ground  for  rejection 105 

Of  revocation  of  submission 10 

Of  time  and  place  of  hearing  arbitration 14 

To  seller's  broker  not  notice  to  buyer 33 

To  seller's  broker  insufficient 91 


O 

OATH 

Of  arbitrator 13 

OPENING  PRICE 

Governing  future  sales 94 

When  price  is  guaranteed  against 126 

ORAL 

Submission 7 

P 
PARTNER 

Cannot  bind  co-partnership  by  submission ". 5 

PEANUT  OIL 64-237-250 

PEANUTS 77-105-162-174-193-215-264 

PENALTY  (for  late  shipment) 186 

PEPPER 83 

PILFERAGE 

Vessel  responsible  for 227 

PLATE  CUTTINGS 127 

PROCEEDINGS 

In  arbitration 15 

PROCEDURE 

In  arbitration 14 

PROFIT 

Loss  of,  when  not  allowed 31 


xiv  INDEX 

PROMPT                                                                                                                     Page 
Answer  is  not  made  by  night  letter 34 

PROMPT  SHIPMENT 302 

Meaning  of  term 198 

PROTEST 

As  to  excess  quantity  of  laths  in  lumber  cargo  should  be  made  when  offered .  223 

PRUNES 31-32-47-95-141-190-250-257-258 

Q 

QUALIFICATION 

Of  arbitrators 11 

QUALITY 

Certificate  of,  not  final  when  parties  waive  finality 42 

When  determinable  by  sample 169 

QUANTITY 

"About"  number  of  tons  not  specific 255 

QUICK  SHIPMENT 178 


RAISINS 32-33 

REFRIGERATION 147 

A  special  service 147 

Not  a  part  of  freight  tariff 147 

Payment  of  charges  for,  on  coconut  oil  under  F.  O.  B.  New  York  contract.  .  147 

REJECTION 149 

After  acceptance  not  permissable 106 

Buyer's  option  of,  or  new  tender  for  inferior  quality  of  California  beans  .  .  .150 

Clause  not  in  uniform  vegetable  oil  rules 150 

Constitutes  delivery 149 

Effect  of  delay  in  acting  upon 264 

Failure  to  give  notice  of  arrival  is  not  ground  for 105 

For  fraud,  deception  and  gross  carelessness 150 

For  late  shipment  after  consenting  thereto  not  sustained 215 

Must  be  for  cause 149 

New  tender  not  required  under  clause  providing  for 162 

Permissible  for  wrongful  dating  of  bill  of  lading 195 

Permitted  when  goods  shipped  day  late 191 

When  rule  is  operative 156 

Withdrawal  of  tender  is  not  acceptance  of . .  . ,    247 

RELATIONSHIP 

Of  arbitrator  to  a  party 13 

REPORTS 

Scope  of  commercial  arbitration 29 

RESPONSIBILITY 

For  demurrage  on  vessel 220 

For  state  tolls  under  sale  of  lumber  ex  ships  tackles 221 

Of  seller  when  acting  as  agent  of  buyer 31 

REVERSAL 

Of  award  for  concealment  of  facts 163 


INDEX  xv 

REVOCATION  Page 

Of  submission 9 

By  death  of  arbitrator 10 

By  death  of  a  party 9 

By  lunacy  of  a  party 9 

By  operation  of  law 9 

By  refusal  of  arbitrator  to  act 10 

By  suit  involving  same  subject  matter 10 

Effect  of  bankruptcy  of  a  party  on 10 

Formality  of 10 

Notice  of 10 

Time  of 10 

RICE 34-42-58-65-70-74-81-86-88-91-99-129-166-167-182-215-247-254-260 

RICE  ASSOCIATION  OF  CALIFORNIA 302 

Appeal  in  arbitration 304 

Fees  of 303 

Rules  of 302 

RULES 

Governing  minimum  carload 139 

Of  arbitration  of  California  Bean  Dealers  Association 304 

Of  arbitration  of  Chamber  of  Commerce  of  State  of  New  York 268 

Of  arbitration  of  Chicago  Board  of  Trade 278 

Of  arbitration  of  Dried  Fruit  Association  of  California 300 

Of  arbitration  of  Dried  Fruit  Association  of  Chicago 300 

Of  arbitration  of  Dried  Fruit  Association  of  New  York 300 

Of  arbitration  of  Dried  Fruit  Association  of  St.  Louis 300 

Of  arbitration  of  Foreign  Commerce  Association  of  the  Pacific  Coast 272 

Of  arbitration  of  Interstate  Cottonseed  Crushers  Association 293 

Of  arbitration  of    National    Canned    Foods    and    Dried    Fruits    Brokers 

Association 300 

Of  arbitration  of  National  Canners  Association 300 

Of  arbitration  of  National  Wholesale  Grocers  Association 300 

Of  arbitration  of  New  Orleans  Board  of  Trade,  Limited 283 

Of  arbitration  of  Rice  Association  of  California 302 

Of  arbitration  of  San  Francisco  Chamber  of  Commerce 286 


S 
SALES  • 

On  sample 165 

Quality  must  be  equal  to  sample  submitted 165 

S  A  LMON 126 

SAMPLE  (S)  (SEE  SALES) 165 

Arbitrators  may  determine  sufficiency  of 173 

Careless  identification  of  rice 166 

Delivery  must  conform  to 165 

Description  of  goods  controls  when  sale  is  not  on 171 

Effect  of  failure  to  submit 91 

Effect  of  submitting,  when  goods  are  described 171 

For  arbitration 173 

For  arbitration  drawn  by  buyer  in  good  faith  valid 175 

Goods  may  be  of  better  grade  than 170 

Governs  delivery 170 

Misbranding  goods  sold  on 170 

Sent  by  seller  is  part  of  contract  terms 168 

Sufficiency  of 250 

When  quality  is  determinable  by 169 


xvi  INDEX 

SAMPLING  Page 

Effect  of  failure  to  permit 75 

Of  copra .173 

(And  weighing)  of  vegetable  oil 173 

Permit  on  bonded  warehouse  not  a  valid  tender  of  goods  sold  ex  dock, 
duty  paid 243 

SAN  FRANCISCO 

Discharge  at  Oakland  not  permitted  when  charter  party  specifies 222 

Dock  rental  chargeable  to  vessel  at 225 

Port  Costa  not  part  of  port  of 223 

SAN  FRANCISCO  CHAMBER  OF  COMMERCE 285 

Appeal  in  arbitration 286 

Fees  of 286 

Rules  of  arbitration  of 286 

SELLER  (S) 

Absence  of  fraud  on  part  of 156 

At  fault  if  vessel  is  missed 190 

At  fault  in  making  unauthorized  shipment 250 

Buyer  cannot  sustain  claim  when  extra  expense  incurred  by  delay  of  docu- 
ments is  guaranteed  by 129 

Cannot  guarantee  actual  sailing  of  vessel 191 

Claim  paid  by  buyer  to  subsequent  purchaser  not  valid  against 75 

Default  of  supplier  not  a  contingency  beyond  control  of 85 

Entitled  to  notice  before  buyer  purchases  for  his  account 199-202 

Force  majeure  does  not  excuse,  when  he  fails  to  declare  vessel 98 

Liable  for  non-delivery  of  coconut 87 

Liable  for  shipping  without  instructions 83 

Must  prove  increase  in  freight  rate' 71 

Not  entitled  to  interest  on  deferred  delivery  of  barley 231 

Not  excused  by  carrier  shutting  out  copra  cargo 85 

Not  excused  for  late  shipment  unless  strike  is  general  or  mill  is  specified.  .199 

Not  excused  for  non-shipment  by  default  of  supplier 85 

Not  excused  by  supplier's  failure  to  deliver 94 

Not  obligated  to  make  declaration 100 

Not  obliged  to  make  other  tender  when  sample  disapproved  by  buyer ....  167 
Not  required  to  make  new  tender  under  rejection  constitutes  delivery  clause.  162 

Not  responsible  for  buyer's  laches 187 

Not  responsible  for  car  shortage  when  specifically  exempted 213 

Not  responsible  for  diversion  when  request  too  late  to  be  effected 52 

Not  responsible  for  late  shipment  when  vessel's  sailing  is  postponed 188 

Not  responsible  for  wharfage  under  C.  I.  F.  contract  duty  paid 70 

Not  responsible  for  carrier's  error 114 

Obligation  of,  under  C.  I.  F.  contract 55 

Obligation  of,  under  C.  &  F.  contract 55 

Obligation  to  make  delivery  under  contract  not  containing   "rejection 

constitutes  delivery"  clause 245 

Option  of  second  tender  must  be  elected  promptly  and  formally  to  keep  it 

alive 243 

Payment  by  of  duty  does  not  breach  C.  I.  F.  contract 65 

Penalized  for  concealing  facts  from  arbitrators 163 

Penalized  for  failure  to  submit  sample  until  too  late  to  effect  delivery 

within  contract  time 91 

Penalized  for  misrepresentation  as  to  strike  delaying  shipment 199 

Responsible  for  refrigeration  charges  on  coconut  oil  when  sold  F.  O.  B. 

New  York 147 

Responsible  for  uneven  weights  under  F.  O.  B.  cars  contract 260 

Right  to  make  second  tender 245 

Sample  is  part  of  contract  terms  when  sent  by 168 

Liable  in  damages  when  diverting  and  selling  goods  before  arbitration.  ...   95 

Shutting  out  of  cargo  by  carrier  not  contingency  beyond  control  of 85 

Without  cause,  cannot  rescind  contract  unless  buyer  consents 91 


INDEX  xvii 

SHIPMENT  Page 

Bill  of  lading  evidence  of . .  . \ 193 

Breakdown  of  vessel's  engine  excuses  delay  in 212 

Buyer  cannot  sustain  claim  for  delay  in,  when  made  within  contract  time.  .215 

By  "first  available  steamer"  defined 190 

Damages  allowed  for  late,  when  buyer  purchased  for  seller's  account  after 

notice 202 

Date  of  bill  of  lading  governs  as  to  time  of 74 

Date  of  bill  of  lading  or  shipping  receipt  final  as  to  date  of 183 

Date  of  clearance  not  date  of 191 

Day's  time  in,  an  important  variation  in  contract 191 

Defined  and  discussed 177 

Direct 177 

Effect  of  car  congestion  on 189 

Extension  of  time  of,  under  misrepresentation 199 

Failure  to  make  immediate,  of  beans 33 

'First  half  October"  does  not  mean  sailing  or  steaming 189 

Force  majeure  as  affecting  time  of 205 

Immediate 178 

Inability  to  obtain  cars  no  excuse  for  late 191 

Indirect 178 

January  "received  for  shipment"  lading  not  conclusive  evidence  of  January.  216 

June,  does  not  mean  June  tender 194 

Legal  holidays  affecting  time  of 198 

May  be  made  direct  or  indirect  if  not  otherwise  specified 99 

On  October  1st  non-compliance  with  contract  specifying  August-September.  191 

Penalty  for  late 186 

Prompt 178 

Quick 178 

Rule  applying  to  domestic 183 

Seller  at  fault  in  making  unauthorized 250 

Seller  penalized  for  late 191 

Shipping  instructions  do  not  control 215 

Time  of 183 

Time  of,  an  essential  element  of  contracts 178 

Time  of,  not  controlled  by  vessel's  clearance 74 

When  vessel's  sailing  is  postponed  seller  not  responsible  for  late 188 

SHIPPER 

Not  allowed  damages  for  improper  stowage  of  tar  when  consented  to  by 

his  agent 227 

Responsibility  of,  for  trans-shipment  charges  on  steel  rails 226 

SHIPPING 219 

Effect  of  war  on 247 

Vessel  responsible  for  short  delivery  of  grain 220 

SHIPS  TACKLES 

Differentiation  between  terms  ex  dock  and 221 

SHORTAGE 

Of  rail  equipment  does  not  relieve  charterer  of  demurrage  on  vessel 222 

Of  rail  equipment  excuses  delay  in  shipment 213 

SOYA  BEAN  OIL 100-194 

"SPOT"  SALE 

Meaning  of  term 252 

STATE  TOLLS 

Responsibility  for 221 

STATUTE 

What  may  be  submitted  under 25 


xviii  INDEX 

Page 

STATUTORY  ARBITRATION 25 

Difference  between  common  law  and 3 

STEEL  BARS 233 

STEEL  RAILS 226 

STRIKE 

Clause  fully  interpreted 202 

Differentiation  between,  and  labor  trouble 199 

Does  not  excuse  seller  unless  clearly  specified  or  the  same  is  general 199 

SUBMISSION 

Administrator  cannot  bind  estate  by 6 

Agent  must  have  specific  authority  to  make 5 

An  infant  not  bound  by •  5 

Arbitrators  named  in 25 

As  a  condition  precedent 8 

Assignees  in  bankruptcy  may  make 6 

Bankrupt  cannot  bind  assignees  or  estate  by 6 

Corporation  may  make 6 

Creates  special  jurisdiction 7 

Defined ! 5 

Executor  or  administrator  may  make 6 

Fixing  of  time  for  award  in 7 

Forms  of,  to  arbitration 309 

Guardian  has  general  authority  to  make 6 

In  writing 7-25 

May  be  general  or  limited  in  scope 6 

Nature  of 6 

Oral 7 

Partner  cannot  bind  co-partnership  by 5 

Revocation  of 9 

Under  statute,  who  may  make 25 

When  entered  as  an  order  of  court 25 

Who  may  make 5 

SUBSTITUTION 

Of  arbitrator 13-53 

SUGAR 145-229 

T 

TANK  CARS 237 

Failure  to  have  buyer's,  read}'  for  vegetable  oil 237 

Variation  in  number  of,  not  permitted 255 

TAR 227 

TARE 

Delayed  determination  of 258 

TENDER 241 

Buyer  cannot  cancel  contract  without  having  demanded 252 

Buyer  not  entitled  to  new 162 

Delay  in,  of  weight  certificate  and  warehouse  receipt  not  justification  for 

cancellation  of  contract 262 

June  shipment  does  not  mean  June 194 

Limitation  in  contract  as  to  second 250 

Mistake  in,  may  be  corrected 247 

Must  act  upon,  within  48  hours 241 

Must  be  to  designated  agent 250 


INDEX  xix 

TENDER— Continued  Page 

Of  delivery  order  and  warehouse  receipts  does  not  comply  with  F.  O.  B. 

cars  contract 254 

Of  sampling  permit  not  a  valid,  of  goods  sold  ex  dock  duty  paid 241 

Reasonableness  of  time  of 245 

Right  of  second 243-245 

Rules  governing 241 

Seller  not  obliged  to  make  other,  when  sample  disapproved  by  buyer 167 

Under  rejection  clause  seller  not  required  to  make  new 162 

When  second,  permitted 250 

Withdrawal  of,  not  acceptance  of  rejection 247 

TIME 

Extension  of,  for  making  award 8 

Failure  of  vessel  to  reach  loading  port  on 212 

For  making  award  in  submission 7 

Of  delivery  affected  by  force  majeure 106 

Of  revocation  of  submission 7 

Of  shipment  not  evidenced  by  "received  for  shipment  lading" 216 

Of  shipment  governed  by  bill  of  lading 74 

Of  shipment  not  controlled  by  vessel's  clearance 74 

Of  shipment  an  essential  element  of  contracts 178 

TIN 130 

TRADE 

Custom  of  dried  fruit  does  not  apply 258 

Custom  of  steel 233 

TRANS-SHIPMENT 

Charges  must  be  actual 226 

Charges  on  steel  rails  must  be  paid  by  shipper 226 

Permitted  under  C.  I.  F.  contract 65 

Under  direct  shipment  contract  withdrawal  of  regular  vessels  from  route 

does  not  justify 181 

Under  C.  I.  F.  contract 182 


U 

UMPIRE 

Distinguished  from  third  arbitrator 12 

Power  to  appoint,  limited  by  statute 26 

"USUAL  PACKING" 

Term  in  peanut  contract  is  uncertain 264 


V 
VALIDITY 

Of  agreement  to  submit 8 

VARIATION 

In  excess  of  10  per  cent  in  weight  of  dried  fruit 257 

In  number  of  tank  cars  not  permitted 255 

In  specific  quantity  sales 255 

VEGETABLE  OIL 255 

Sampling  and  weighing  of 173 


xx  INDEX 

VESSEL  Page 

Breakdown  of  engine  excuses  delay  in  shipment 212 

Damage  to,  by  tug  having  her  in  tow 224 

Dock  rental  chargeable  to,  at  San  Francisco 225 

Effect  of  overengaging 229 

Liable  for  short  delivery  of  nitrate  of  soda 229 

Responsible  for  extra  freight  charges  when  cargo  under  contract  is  shut 

out... 229 

Responsible  for  pilferage,  short  delivery  of  cases,  packages  or  pieces.  . .  .227 
Responsible  for  short  delivery  of  grain 220 


W 

WALNUT  MEATS 37 

WALNUTS 156^162-243-245 

WAR 

Effect  of,  on  contracts 117 

WAREHOUSE 

Delay  in  tender  of  weight  certificate  and,  receipt  not  justification  for 
cancellation  of  contract 262 

WEIGHING 

(And  sampling)  of  vegetable  oil 173 

WEIGHTS 257 

At  point  of  shipment  govern  goods  sold  F.  O.  B.  dock 127 

Buyer  entitled  to,  at  destination  in  absence  of  true  shipping 263 

Delayed  determination  of  tare 258 

Delay  in  tender  of,   certificate   and  warehouse  receipt  not  justification 

for  cancellation  of  contract 262 

Effect  of  changing  dried  fruit  specification 258 

First  taken  as  average 260 

Guaranteeing  of  tare 258 

Seller  responsible  for  uneven,  under  F.  O.  B.  cars  contract 260 

Should  be  taken  in  reasonable  time 260 

Variation  in  excess  of  1  per  cent  in,  of  dried  fruit 257 

When  contract  specifies  "usual  packing"  for  peanuts,  may  exceed  100 

lbs.  per  bag 264 

WHARFAGE 

Under  C.  I.  F.  contract,  duty  paid,  seller  not  responsible  for 70 

WRITTEN 

Statutes  generally  provide  for,  submission 25 

Submission 7 


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